Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: Air Transport’s route to 2050. Part 14. March 21, 2025
- How good is the COMAC C919? March 20, 2025
- Boeing CFO Brian West: OK on tariffs for now, backlogs and inventories help March 20, 2025
- Pontifications: Southwest’s core problems are not solved by business model changes-yet March 19, 2025
- Boeing 2024 Proxy Statement: Executive Compensation includes retirement gifts for Calhoun, Deal; housing support for Ortberg, Pope, and other stuff March 17, 2025
How Boeing’s actions affect Products, Airbus: Analysis (Update)
Updated Oct. 12 with new and clarifying information.
By Scott Hamilton
Oct. 11, 2024, © Leeham News: Boeing’s late announcement today of a 10% company-wide layoff of its 170,000 leaves a lot of questions.
Boeing managers were told to expect guidance on Monday. As of Saturday, there is no information available about where the layoffs will occur–how many will be from Boeing Commercial Airplanes, for example, vs Boeing’s Defense and Services units.
Boeing’s announcement did not define “executives;” LNA understands that in the company’s organization, “executives” extend down to the Director management level.
Beyond the immediate, announced moves and impacts to Boeing (see Related Article), terminating the 767-300ERF program in 2027 when current orders are filled will hurt the US Air Force KC-46A aerial refueling tanker cost basis. The commercial program absorbed some of the tanker’s program costs. This was one reason cited by FedEx’s founder Fred Smith to support extending production beyond 2027 when new international emissions regulations render the civilian version ineligible to continue.
Pushing entry-into-service of the 777-9 to 2026 and the 777-8F into 2028 should benefit Airbus with sales of the A350. Its largest passenger version, the -1000 model, is smaller than the 777-9 by nominally 60 passengers. But some airlines consider the -9 too big anyway. Airbus has few near-term production slots available for the A350, so any delay for the 777-9 benefits Airbus.
The same holds true for the 777-8F. Airbus offers a freighter version of the A350 and further delays of the 777-8F should benefit Airbus.
Airbus has a goal to produce 10 A350s a month in 2026. The line is essentially sold out then and slightly oversold in 2027. But the wing factor in Wales has a capacity of 12-13 shipsets a month; it’s unclear what the current capacity of the A350 final assembly line in Toulouse is. The pacing item remains with the supply chain capacity.
Related Story
Future of the 777-8P uncertain
Additionally, the entry-into-service of the announced 777-8 passenger model is likely also pushed out. Boeing’s statement of the delays to the -9 and -8F was silent about the -8P. Now, it appears the -8P won’t be available until 2030—if at all. There are only 43 orders for the ultra-long range model, which is the same size as the current 777-300ER and the 777-8F (for which there are 55 orders). It’s unclear if Boeing will proceed with the -8P. The A350-1000 is also the same size; Airbus offers an Ultra-Long Range version of the -1000.
LNA believes Airbus will attempt to boost A350 production capacity to 12-13 a month in 2027 or 2028.
Boeing announced another multi-billion-dollar write-off of the 777X ($2.6bn), in addition to a previous billion-dollar write-off.
Terminating the 767F
Terminating the 767F has major implications for Boeing. This mid-size freighter is the backbone of package freight airlines: FedEx, UPS, DHL and so far, Amazon’s Prime Air. (Amazon is adding converted Airbus A330-300s to its freighter fleet.) FedEx and UPS purchased new built freighters while the others converted passenger models retired by the airlines. These two carriers hold the remaining new orders from Boeing.
At the end of 2027, under new emissions rules proposed by the International Civil Aviation Organization and adopted by the Federal Aviation Administration, production of any new aircraft failing to meet the rules must cease. Because the 767F is powered by older generation engines, the freighter fails to qualify with the new rules. Two years ago, LNA was the first outlet to reveal that the 767F production would have to end. Boeing lobbied the FAA to exempt the 767F because there is no replacement at this time. Congressional legislation on other aviation matters included a provision that would allow production to continue.
But few orders were remaining for the 767F anyway, and Boeing was developing a 787 freighter model based on either the smallest -8 or the slightly larger -9. Both have larger wingspans than the 767F, which met with resistance from FedEx. Both carried more cargo volume than the 767F, another area of concern for the package freight airlines.
767, Tanker losses
Since the 767F shares the production line with the Air Force KC-46A tanker, production costs could be spread over the two airplanes. With the termination of the 767F, the tanker will have to absorb all the costs. This makes it harder for Boeing to reach profitability on a program that has already seen more than $7bn in write-offs.
The company announced a $400m write-off on the 767 program. Another write-off on the tanker program of $700m was announced.
Various other defense and space programs also incurred more write-offs.
See our previous story about Fixing Boeing.
Related Story
Burning through more cash
Boeing also announced it burned through another $1.3bn in cash during the third quarter. The IAM strike began at 12:01am on Sept. 13, so not all of this cash burn may be attributable to the strike. Cash burn estimates by aerospace analysts vary widely: $50m to $150m a day. Boeing’s 3Q2024 financial call is on Oct. 23, and more clarity may be released then.
The company ended the quarter with $10.5bn in cash and marketable securities. Boeing needs $10bn in cash to run the company (excluding the strike impact). Several news outlets report that Boeing may tap the equity market for $10bn in stock sales. Wells Fargo’s aerospace analyst suggests Boeing may seek as much as $15bn in new equity or equivalent securities.
Related Story
No action on this money raise is expected until after the strike is over.
is the demand for the 350 really so strong that a 12/m production can be justified? After all, Airbus cannot reduce production and fire people as did Boeing when they closed half of the 787 production, that was obviously too high at 158 per annum.
12/m would only be feasible if airlines are so fed up by Boeing that they buy any 350 at any price now.
12/m suggests that shortage issue for chips and certain spare parts is solved now.
Any increase in production is targeted at 777x orders. Whether they can hit that volume or not Airbus may be going for a kill shot by getting emirates or Qatar to switch sides
I would not be surprised if LH pulls the trigger on additional 350k as well, they want to desperately get rid of their 744 and 346
There have previously been hints that Airbus were deliberately hanging back from a “kill shot”; becoming a global monopoly by deliberate marketing action would put Airbus (so they are rumoured to fear) in a poor position politially in the USA (regardless of who wins the US election).
But it must surely be becoming harder and harder to hold off; launching a 777-9 beating A350-1100 sounds like it ought to be very easy. Even launching A380neo would be possible. Another A320 FAL sounds achievable (pending supplier capacity increases). It sounds like Airbus are quasi-beseiged by suppliers and airline customers, both asking them to increase their production capacity in the light of Boeing’s difficulties. If Boeing did actually collapse, Airbus would have to cave in otherwise there’s grave global economic impacts.
So at what point does Airbus actually do it? Today? Tomorrow?
Airbus are very close to a de facto monopoly anyway, with Boeing’s delivery rate being so low. Boeing’s order book looks increasingly irrelevant and unrealistic.
I’m convinced the answer is that this needs careful coordination between the USA, Europe, and other major democratic economies. It’s feeling more and more like there does need to be a single global company. It’d be far, far better if that were brought about by a managed process, rather than letting it happen by default amidst a chaotic potential collapse of Boeing.
Enacting any such coordination likely kills Boeing dead. But it would come with an inevitable major uplift in Airbus’s presence and employment in the USA, so at least the USA would be sure to stay in the business and retain the skills, jobs, facilities.
I don’t think it is realistic that there would be a monopoly, there needs to be competition in this market. But it can’t remain this skewed towards Airbus.
Boeing needs a proper turn-around, a real restructuring. The company needs to get rid of most of the debt, it must be properly financed so they can develop new aircraft models, non-performing programs must be shut down so they can focus on the ones with future prospects.
The question is how much this will cost, I would guess somewhere around 100 Bn USD.
I agree there needs to be competition, but we can’t escape the fact that – for short periods in the recent past, when Boeing have been shutdown – Airbus has been the global monopoly.
Boeing certainly does need a proper turn around. I think $100billion is optimistic. They owe $60billion in debt, and I think they’ll be adding $10billion slices to that for a while yet even if the full-scale turn around kicked in now.
My own view one what they need to develop is an A320 clone. If they can at least match it, get it flying with a trouble free development program, they’ll have had practice for more long-term product revamps.
@Mathew:
The A380 is not coming back. Simply is not happening.
Airbus could certainly do an A350-1100. Boeing goes down it becomes a certainty. With more delays its worth Airbus doing it. They do have to bet the A350F going first though.
Airbus can’t replace Boeing production. In theory we are talking 120+ MAX/A320 series a month not to mention the 787 fit for Airlines as it hit a sweet spot.
Equally the jobs in the US would not be replaced by Airbus, some yes but it would be a huge loss.
Boeing would go bankrupt before that happened and that opens massive doors to recovery.
US government has two major vested interested, BCA and its jobs and the BDS and its critical production ops as well as those related jobs.
The KC-46A could be replaced by an A330MRT, but the F-15EX, Hornet, Chinook, V22, Apaches, no. The F-35 continues to be a mess and F-15EX offers huge missile capacity no other aircraft can.
As rpreviously reported on this site Airbus studied a stretch of the A530-1000 and presented it to customers. They shelved the idea. There is insufficient demand for a simple stretch.
Indeed so. But, perhaps things have changed. I’m sure that Airbus will remain talking to their customers about what they want.
It’s notable that a the orders for 777-9 picked up fairly well, once it started looking like certification activity was taking place. Now with the strike and thrust-link issues, the airlines are inevitably revisting their own business cases / plans.
I agree with Matthew, the never ending 777X saga means airlines have to think about that segment.
What was not to be before could well have changed. Timelines are important though.
At this point I have no idea where Boeing is going nor does anyone else.
Why bother with an A350-1100?
A 100% load factor on an A350-1000 corresponds to a 95% load factor on a 777-9.
Average load factors at Emirates hover around 80%. So, an A350-1000 is a perfectly adequate capacity replacement for a 777-9 (in addition to having greater range / much lower fuel burn).
Understood, and 80% leaves quite a lot of headroom. But if an airline wanted to leave room for market growth beyond that they’d need extra seats. They clearly have ambitions to have that, otherwise why would they order a 777-9 in the first place?
“A 100% load factor on an A350-1000 corresponds to a 95% load factor on a 777-9.”
That’s a bit simplistic. There are so many variables.
Are there any major A350-1000 or 777-9 customers who go anywhere near full capacity on their long-haul aircraft?
British Airways for example have more seats on their A350s (341) than their future 777-9s (325) as they will have an F cabin on the Boeings which they don’t have on the Airbus.
If they want F on any future A350 orders they’re going to need a bigger aircraft or reduce overall seating capacity.
JAL’s A350-1000 with F only have 239 seats in total and Qantas’ have 238 for example. If BA go for a similar configuration on any future order that’s around a 25% reduction in seats vs the 777-9 in a four class layout.
“… would put Airbus (so they are rumoured to fear) in a poor position politially in the USA …”
Not really relevant any more.
The US and EU now diverge on so many issues that the relationship is essentially on life support.
Asia is now a far more important partner for the EU (and many other countries/groups).
And Airbus won’t have a global monopoly, because COMAC is stepping onto the stage.
COMAC!!! Say what, the planes has only been ordered by Airlines inside China that has been forced too, if we have to rely on COMAC, we will go back to horse and carts
Airbus would still want to sell to the USA, and that market would be at risk (or heavily compromised) if there were an adverse political reaction in the USA driven by its exit from the commarcial aircraft manufacturing business.
The politics of “failure” are seldom rational, and political reactions are often aimed at diverting attention away from the political screw-ups / laziness that contributed to that failure. Distraction often means picking someone else to be the fall-guy (regardless of justification), and that would be Airbus.
Comac aren’t there yet, but they might be one day. the USA / Boeing are presenting them with a golden opportunity to steal Boeing’s market share. The way the USA / Boeing are going, Americans are going to find themselves flying around inside the USA on airliners built in China. And they might start wondering why…
@ Dennis
You forgot the qualifier “so far”.
Let’s look one year from now and see how many foreign orders COMAC has on the books.
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“if we have to rely on COMAC, we will go back to horse and carts”
Substitute “BA” for “COMAC” and that assertion will be spot on.
Comac will never get there. Its a bloated state enterprise that is risk adverse. A bit like having an Patagotitan mayorum dance the ballet.
Airbus took risks early on. Now they are not nor do they have to.
Comac took NO risks. Russia at least had the right idea in the MC-21.
What is missing is Boeing can declare bankruptcy and the wonders of financing when you do is amazing. The US is not going to let Boeing just disappear.
Long term its a good question what its future would be. Assuming that they can clear the 777X, they have a viable product line for now. Yea I know, the MAX is aged but its as good as an A320 (if you can get one).
Longer term, new products and what form. They still would be a distant Number 2 in single aisle though they can be very competaive in the mid size wide body (787).
Boeing has a better widebody lineup than Airbus. This is not up for debate. The Max is decent and will make money.
Yes airbus has a better narrow body but it’s not the end of Boeing and no America will not let Boeing fail.
Boeing will come out of this stronger and Airbus is already counting on it.
https://fortune.com/europe/2024/07/16/airbus-cost-cutting-halting-hiring-bounce-back-boeing-comac/
“superior product portfolio”
You may have exited the paratime transporter at the wrong timeline.
ref: https://en.wikipedia.org/wiki/Paratime_series#The_Paratime_universe
“Boeing has a better widebody lineup than Airbus. This is not up for debate.”
Let’s see:
– First off is the 777X, which still isn’t anywhere near certification, and keeps suffering cumulative delays. Featuring fuselage ripout, uncommanded pitch change, mandated flight control software re-write, and now the thrust link screw-up. It also has a multi-billion dollar reach-forward loss.
Yes — that plane is certainly an inspiration to all 👍
– Next up: the illustrious 787. Unrecoverable program loss: the program will never turn a penny of profit. Under-pricing, due to price pressure from A330neo. Shimming faults, sub-par composite use, and 1000 in-service frames requiring “open heart surgery” during their next heavy check — with no clue as to what that will reveal. Frames from Charleston being sent to Seattle to patch up the ongoing manufacturing faults, with multiple customers raising FOD complaints. Due to fuselage design, unfeasible as a freighter.
Yes — another stunning success 👍
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“The Max is decent and will make money.”
“Decent” — ROFL.
2 crashes, door blowout, rudder problems, wiring screw-ups, nacelle overheating screw-up, unexplained altitude loss.
Another FOD-plagued program.
Line output-limited by FAA.
Trans
Don’t you see the emperor has no clothes??
Emirates’ Clark raises ‘looming’ specter of Boeing bankruptcy protection
See my post today on another thread.
Even if the cash burn is on the low side of estimates then Boeing is already at $10B.
A layoff doesn’t even slow this down as they will still be paying severance.
I have to wonder how long Boeing can go before a ratings cut occurs for lack of liquidity
Good point and I am seeing bankruptcy looming more and more . 60 billion in debt and even if you got the strike ended tomorrow, its months before anything stabilizes.
You have the three military programs loosing money (still) and the Space portion of BDS is a train wreck. What the satellite division is doing I don’t know but they have the rocket launch up for sale (joint owned but along with Lockheed who wants to dump that part of their ops as well)
” cash burn is on the low side of estimates then Boeing is already at $10B.”
check your math.
$50 mill per (work) day doesnt add up to $10 bill does it – it would have to be a 200 work-day strike
So far its a 20 work-day strike
Haha IIRC BA needs like a min $10 billion to run. Like GM, it filed for bankruptcy while it still had “billions” of cash.
https://s2.q4cdn.com/661678649/files/doc_financials/2024/q2/2024-06-Jun-30-8K-PR-Ex-99-1.pdf
As of Q2 /2024
Free cash flow ($8,256)
It will probably exceed $10bn by the end of Q3. We’ll know in a couple of weeks.
@Casey
BA delivered 33 aircraft in Sept, although it’s down from 40 in August, there’s an increase of six planes yoy nonetheless.
So my conclusion is: the effect of the strike has not been reflected in last month’s delivery.
By the end of September, the strike is barely a bit more than two weeks long, it may be inappropriate to quantify the effects of the strike based on numbers as of the end of Q3. The worse has yet to come.
@Pedro
Hard to disagree. There were reports of Boeing racing to get everything done before the contract vote. And as I am finding out, it may be several days between completion of aircraft and delivery.
Long story short, Boeing is going to take a while to refill the pipeline whenever this does end. If this strike does not end in another week, then the total deliveries will be close to zero (B787 will be it)…so maybe 3 aircraft.
@ Pedro is factually correct (as usual):
“The aircraft handed over last month had already been cleared by US regulators prior to the strike by 33,000 members of International Association of Machinists and Aerospace Workers, who walked off the job on Sept. 13, closing down manufacturing across the west coast of the US.”
https://www.bloomberg.com/news/articles/2024-10-08/boeing-cautions-on-deliveries-after-strike-curbs-aircraft-output/
So, the real delivery-figure drama will come in October…
@Duke
I will clarify. $10B in cash as of today left. My math is $500M so far month to date burned. I am not excluding weekend days but that would be a relative round off error at this point
“We’re told that BCA leadership was blindsided by the announcement by Kelly Ortberg, CEO of The Boeing Co.”
Remarkable communication / leadership style.
Sounds like the board is in consderable disarray.
Once again at BA, the left hand doesn’t know what the right hand is doing.
It’s both fascinating and scary to see how Boeing’s management have destroyed this once great company over the years.
There is just nothing going in the right direction for them these days.
The problems at BCA have been in focus the last few years overshadowing the massive issues in BDS. And this is during a time when basically all other defense companies in both the US and Europe are having the time of their lives. Those fixed price contracts that Muilenberg offered are really biting Boeing in the tail now…
Will be very interesting to see where this ends, it feels like they need to go through a major restructuring before they can start turning this company around.
@Harry
Lets be clear, the KC-46A RFP was fixed price. Boeing threw its hat in the ring, but it did not OFFER that deal. By the way, its the same legality as Airbus loosing their bid as credits they were given were NOT in that legal bid document.
T-7A was also fixed price. Boeing bid and low, that in the US is known as leaving money on the table when you bid so low no one is going to match it. That was true for both those contracts, Boeing did not have to bid as low as they did. Agreed it was stupid but it was not offered.
MQ-25 also fixed price. Ditto above comments.
AF-1, same deal I believe. But that is what happens when you think you can play someone trying to make up for your other stupidity.
So what did Boeing offer in the end then?
I was under the impression that these contracts were fixed price so Boeing would carry the risk if they got more expensive than anticipated (which they always end up getting). Hearing Muilenberg saying that the idea was to make money in the aftermarket instead.
Would be great to understand better why BDS is performing so poorly when all other defense firms are doing so well.
Incompetence at the top?
The GAO report showed nine of Boeing’s major DoD programs have had cost overruns or quality problems and/or delays.
GAO also reported “Boeing data suggest that the cost of [F-15EX] rework has more than quadrupled over the past year. Boeing is still refining the forward fuselage’s new, automated manufacturing process, which could result in increased rework costs and additional schedule delays.”
IMU:
Boeing had to underbid Airbus by a certain amount ( 10% ? )
to fend of products being compared on extra capabilities.
The latest RFP for KC-X missed a big point accessing the real costs:
program risk. What are the costs for a delayed aircraft due to burning more fuel on KC-135, delivering parcels with a C-17 or maintaining the KC-135? Develepment risk was accessed higher for Boeing by US Air Force and that wasn’t disputed by GAO.
The A330MRTT was already flying and tanking while the KC-46 was still a sketch.
Only order foreign order for KC-46 so far: Japan because the built a huge chunk of 767 just like Italy. Italy stopped their order in July 2024.
Also Israel.
But that’s not really an order — it’s a standard allotment.
An order for the A330MRTT by the USAF would be an admission that the US aircraft industry is broken — and that’s a no-no.
We all know it’s broken, but a veneer of disguise/denial must be kept in place, for face-saving purposes.
they could do their own 767 based tanker but this was “frustrated” : https://theaviationgeekclub.com/boeing-expected-to-block-iais-bid-to-convert-767-into-aerial-tankers/
In Sept, CFO West called out “development hurdles” on the T-7 trainer and MQ-25 tanker drone.
Are you surprised?
2026 EIS for the 777-9?
What a joke!
That thrust link problem won’t be going away any time soon. They don’t seem to even know the exact *nature* of the failure, not to mind its underlying *cause*. Once they get that figured out (if at all), they then have to come up with an acceptable *solution*, plus the additional time for its actual *implementation*.
Forget 2026 — that’s just a carrot to try to keep TC on board: 2028 is more likely.
Of note: Tim gets his first A350 within two weeks. Imagine that: Emirates’ first new model in more than a decade is actually certified and flying, and not showing a tendency to drop its engines into the Pacific! And, once he sits down with Qatar and realizes that they’re coping just fine with hot-climate engine wear on their A350-1000s, Tim can just pick up the phone and upscale (part of) his existing order for 65 A350-900s to A350-1000s instead.
Does BA really think that customers are going to sit on their hands indefinitely, living off of empty promises of “any day now”…?
It seems most 777x customers have secured A350 slots already. Airlines strategically prefer dual source, even took risks to strenghten Boeings market posotion. But need replacement capacity in the end.
Boeing workers involved; you’ll get over this.
Spot on
If BA manages to get through the current, rapidly-degenerating crisis, does Ortberg think that he then just call back those 17,000 workers into the fold when the clouds clear?
They’ll have gotten other jobs, and they won’t be in a hurry to go back to the cesspit that fired them.
Looks like BA will be hiring even more ex-KFC and ex-Taco Bell…
I honestly think this is a great move by Boeing. Paying employees $25-50 plus an hour to inspect 2 or 3 jobs that usually take less than 5 mins a job to look at. Wow.. what a good gigs.. what media dont mentioned employees get paid double when they work Sunday.. 80% times they work weekend, is worth 2 hrs work. For the rate they are at, no need for all of these people. Hopefully lay off increase numbers to 40%.
A few years back A320 Mobile FAL, production workers just Monday-Friday, no weekends
‘The original contract offer lifted the starting wage for an IAM worker to just over $21 an hour.’
‘One IAM member pointed out that starting wages at area McDonald’s are around $19 an hour. Other, similarly less stressful jobs than those at Boeing that carry far, far less responsibility (e.g., flipping hamburgers vs building a $100m airplane carrying up to 200 passengers with all the safety and reliability requisites) also start around $19 or $20 an hour.’
https://leehamnews.com/2024/10/14/pontifications-boeing-needs-massive-reset-and-not-just-with-labor/
You don’t even want to start with the cost of living in the Seattle area.
What makes you think Boeing will ever need to refill those layoffs? Boeing will undoubtedly shrink permanently. Product lines will either die or be sold off. Boeing, or whatever it ends up being called, will be amuch smaller organizations.
Boeing should have upgraded the 767 10-20 years ago.
All the building blocks were there (engines, cockpit, cabin, system/ wing mods) from the -400ER, -F and KC46.
But they positioned the NMA / 787 as 767 replacements.
Strategic error IMO.
No engines
GenX and Trent 1000 or the TEN these days.
They would not have sold anything of value.
The -400 sold 38 frames 🙂
The successful 787 sales campaign vs the copy base A330
was the prerunner SonicCruiser and its transform into the “super efficient from going slower Dreamliner with all the ubersexy composite and electric details. Fantasy vs Reality. It took Airbus ages to understand that no real existing product could compete with a fantasy mirage.
and IMU the 767 Xsection was no longer competitive.
( while it gave the early 767 versions a range advantage,)
Priorities!
BA was busy figuring out the “Dreamliner” twenty years ago. Ten years ago, they were busy selling more 787 in order to avoid any forward loss in their books.
The 767 will be sun set with the NMA.
@Scott per Airbus 2024H1 press release https://www.airbus.com/en/newsroom/press-releases/2024-07-airbus-reports-half-year-h1-2024-results-3265lkoi#:~:text=Entry%2Dinto%2Dservice%20is%20expected,for%20the%20A350%20in%202028. “On widebody aircraft, the Company continues to target a monthly production rate of 4 A330s in 2024 and rate 12 for the A350 in 2028.” I though agree with your assessment to show a long-term target of 10/month until 2028 given the lingering supply chain issues. Achieving 12/month by the end of the decade is probably the most plausibly optimistic.
The only 2 777-8P customers are Emirates (35) and Etihad (8). The latter does not want its 777-8Ps and the former ordered it because it was not satisfied with the Trent XWB 97 reliability. If Rolls Royce fixes the Trent XWB 97 durability (they claim by 2026) then those two customers won’t have a reason to take the 777-8P anymore. Boeing would also like to save the expense of certifying a variant with so few orders.
In relation to this comment “LNA believes Airbus will attempt to boost A350 production capacity to 12-13 a month in 2027 or 2028.”, Airbus announced in spring 2024 the target to increase to rate 12 in 2028.
it takes about 2 years to get additional production equipment/tooling into BOD
Its not only equipment, suppliers have to be able to ramp up and believe the figures you are throwing out.
If I was a equipment supplier it would only be above a sane level if money was put upfront for all the costs incurred to go there.
12+ A350s a month is nuts. 10 x 777 a month was nuts. 14 a month 787 a month was nuts.
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Re A350 ramp up…Equipment/tooling suppliers the engineering is already done, its a drop and release for duplicate equipment/tooling, it cuts out about 8 month design compared to a new launch. Airbus has the money to ramp up to over 12+, mostly go to 16 a month after 777x is cancelled
DP
Really? How long has Airbus been trying to get to 75 a month on the A320 series?
Every widget has to be there. Can RR crank up? Seems they are still trying to fix the engines for the A350 (1000 that we know of)
Oh and how about them thar A330NEO that need engines.
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Don’t forget GE had no engines available for 777F earlier this year!
Now BCA has stopped production, threw a wrench to CFM production. LNA reported that Airbus is courting BCA suppliers, giving them a lifeline. Capacities taken up won’t come back for BCA anytime soon.
I would assume Airbus would love to be at 75 a month at the 32x right now…
though my perception was the Engine availablity has improved across the board, both in new and spares.
I could see the A330neo benefting from this crisis as its the only widebody with meaningfull capacity increase left, though you would proably have to take it with off the shelve seats
Thanks, we did not catch that.
@Scott, another detail on the 777-8P. The fact no delivery is scheduled before 2030 is actually not news. Below is an extract from Boeing’s 2023 10-K, page 36 (https://s2.q4cdn.com/661678649/files/doc_financials/2023/q4/BOEING-10Q-Q42023-013124.pdf). “First delivery of the 777-8 passenger aircraft is not expected to occur before 2030.”
Would be interesting to know more about the 17,000 individuals slated for layoffs. Are they the most experienced or least experienced?
Calhoun would have cut the most experienced. If average experience level is 10 years per employee, then total experience lost is 10 x 17,000 = 170,000 years. So Calhoun would gladly cut 170,000 years of experience, and then a year later he could testify in the Senate that the quality problems are caused by the inexperienced workforce (that he himself created).
Let’s hope Ortberg is smarter about this than Calhoun. But if Pope is deciding who to layoffs it could be the same as under Calhoun.
While I think a rock is smarter than Calhoun, I wonder about Ortberg as well.
Why did he even bother to un-retire. Calhoun could have done this just fine. Maybe he is.
Pope takes her orders from Ortberg and maybe indirectly Calhoun via the board.
The strike and the rest has Calhouns finger prints all over it.
Its a good point that I have been wondering, where exactly are the terminations coming from? We have Space portion that is doing as badly as the rest. Satellites might be the same though I have not been able to find any real info on it. Maybe an AvWeek reader is more up on that.
Hütchenspiel.
“Where exactly are the terminations coming from?”
The memo claims:
“The headline is a roughly 10% permanent reduction in the size of the non-represented workforce, many of whom are already on furlough or partial furlough.”
So that means if you’re a union member, and not currently on strike, you probably won’t be laid off. At least not until bankruptcy, which appears more likely today than it did even 6 months ago.
Bankruptcy or not, there will be more product lines that they terminate or sell. Given the strategic nature of most of their business there will be a government bailout. There is no other way to get out of the hole that they are in. They have run out of cash and they are losing money on almost every product they sell. I agree with Retired Tech Fellow that it’s astounding that they are even allowed to continue in business with the current leadership. Other places would force them into receivership.
Money alone won’t fix Boeing. The root of Boeing problem is they can’t produce safe and future-proof airplanes anymore, due to the greedy management. It’s systemic and giving them free money at best will only make the cycle to repeat itself.
“You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.”
― Rahm Emanuel
“Cash is King” means that, ultimately, cash flow is the lifeblood of any enterprise
Some really choice details in this article:
“California Boeing workers file whistleblower lawsuits alleging retaliation”
—
“…The incident highlighted a raft of safety violations that were ignored by management, according to a whistleblower lawsuit that was recently transferred to federal court in Los Angeles.
“In the lawsuit, the veteran Boeing employee alleges that his employer retaliated against him for speaking out about problems he saw at Boeing and Millennium Space Systems, a Boeing defense contractor that makes small satellites.”
—
“Garriott, 53, a technician who has worked at Boeing since 1997, alleges his problems began in 2017, when a supervisor at other Boeing operations in El Segundo asked him and others to sign off that work on a government contract had been completed, when it had not.
“When he refused to do so, he said was derided by another manager for not being a “team player,” demoted and denied other work opportunities despite prior positive performance reviews, the lawsuit states.”
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“Attorney Tim Loranger, who is representing passengers on the flight who have sued Boeing, said the allegations in the Los Angeles lawsuits are consistent with union testimony at recent National Transportation Safety Board hearings on the door-plug blowout.
““Boeing’s culture does not value employees’ involvement in safety issues, in issues related to quality assurance and they feel sort of isolated — and that really speaks very loudly to why it is that these problems are happening,” he alleged.”
https://www.columbian.com/news/2024/oct/13/california-boeing-workers-file-whistleblower-lawsuits-alleging-retaliation/
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BA is a piece of driftwood that’s rotten to the core and falling apart at the seams.
“Kelly Ortberg reverts to the Boeing Culture’s Playbook”
“New CEO Kelly Ortberg now seems to have resorted to the old Boeing playbook and strategies, just at the time it needs a fresh start and cultural change. Boeing pre-announced its earnings and strategic changes in a preview of the October 23rd earnings call, and Kelly Ortberg issues a memo to employees in which the company finally realizes how much trouble it is in. The problem is that the solutions he proposed, including a 10% staff cut, will most likely exacerbate, rather than provide viable solutions for the multiple problems the company faces.”
“Running up to the strike, reports of militant activity on breaks that included loud music in the factory and clear animosity regarding the last contract, should have been noticed and factored into decision-making. The ‘best and final’ offer has likely increased the length of the strike by a month and will cost the company dearly in cash flow. It will also further erode management’s credibility when they increase that offer to reach a deal – as Boeing’s ‘best and final’ will turn out to be neither their best, nor final, offer.”
https://airinsight.com/kelly-ortberg-reverts-to-the-boeing-cultures-playbook/
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Must be a cold shower for the blind believers that Ortberg was the Messiah…
“Boeing strike has already cost the company and workers $5 billion, new analysis shows”
“Boeing’s workers and shareholders make up the bulk of the strike losses, at $3.7 billion, the new analysis shows.”
“Losses to Boeing’s suppliers total $900 million in the first four weeks, while non-Boeing Seattle workers impacted by the strike have seen losses of $102 million. Boeing’s customers — the airlines — are also feeling the financial pain, with $285 million in losses to Boeing customers worldwide.”
https://www.cnn.com/2024/10/13/business/boeing-strike-one-month-five-billion-dollars?cid=external-feeds_iluminar_yahoo
“Emirates Blasts Boeing for Delays, Plans ‘Serious Conversations’”
“(Bloomberg) — Emirates, the world’s largest international airline and a major buyer of Boeing Co. widebody aircraft, said it will have “serious conversations” with the US planemaker in coming months following an announcement that the 777X model will be delayed yet again.
““Emirates has had to make significant and highly expensive amendments to our fleet programmes as a result of Boeing’s multiple contractual shortfalls,” President Tim Clark said in a statement, adding that given Boeing’s current situation “I fail to see how Boeing can make any meaningful forecasts of delivery dates.””
https://www.bloomberg.com/news/articles/2024-10-14/emirates-blasts-boeing-for-delays-plans-serious-conversations/
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Poor Tim KEEPS FALLING for the empty, carrot-and-stick, incremental delays being announced by BA — a year here, a year there, all adds up…and the total official delay now is 7 years…but we all know that that will be going up again soon when BA admits that the thrust link problem is a real wasps’ nest.
Like Aunt Imogen in Alice in Wonderland — waiting and waiting for her knight in shining armor…
as it was mentioned a couple articles posts ago…777x is global hub aircraft and that’s why US airlines didn’t buy them
interesting chart on orders for 777x see link
https://en.wikipedia.org/wiki/List_of_Boeing_777X_orders_and_deliveries
“Poor Tim”
His coattails are caught in the Boeing revolving door.
(i.e. he can’t take his trade easily elsewhere _and_ acquire resources there short term.)
Well, he has existing orders for A350-900s, with the first now ready for delivery — a large part of that order can easily be upscaled to the A350-1000.
But he’s so dizzy from that revolving door to which you allude that he can’t think straight. And, thus, he keeps clinging to BA’s sweet-talking “any day now” BS.
You’d think that — after 7 years of being fooled — the penny might have started to drop at this stage.
Commenters point to a (small) capacity difference between the 777-9 and the A350-1000. Well, guess what? You can’t carry passengers on a plane whose EIS keeps getting deferred…
My guess is he wants the A350-900 asap too.
He could upscale but that would not change deliveries near term.
( and he wont be able to increase overall A350 deliveries in a meaningful way.either.)
Someone, on these pages, some years ago, predicted that 777X would never be delivered. At the time I thought that would never be in the realm of possibility, but now it looks distinctly possible.
@Tom
Maybe you keep your old 777X orders on the books just to keep Airbus honest.
After he ran down the A350 and ordered more 777X’s?
Sorry – that price we gave you was last years price. Things have changes since then. You’ll get your 60 or so, at the agreed upon contract price. The A350 is now in hot demand, given the problems at BA and this is the new price.
Airbus knows what the score is.
What’s he gonna do? Order more 777X’s?
IIRC, poor Sir Tim was recently at an airshow, running down the A350, while placing a huge order for the 777X.
I wonder how that’s working out for him?
I do wonder how often Boeing has done “UBERrebates for customer trashing the competitor product” sales.
Other MoO is sabotaging the other side and then attributing the outcome to ones own superior product.
Tim Clark / Emirates isn’t always listening to the right people and took decisions that proved wrong too.
https://leehamnews.com/2014/06/11/analyzing-the-emirates-order-cancellations/
It seems he has been forgiving towards Boeing for a long time. Like most large airlines he wants to have choice, competition when investing in new aircraft.
I think Clark is less enthousiastic about A321XLR’s, long haul A330NEO’s, A350s connecting Europe and Asia directly..
Emirates has an interesting business model. It works for them. However nobody else comes to mind has attempted.
I would be worried about taking delivery of 777X aircraft that have no Tier2 market…unless Boeing is giving a residual value guarantee that nobody is aware of. I have a hard time believing any lessor would want that aircraft either.
The 777X is Boeing’s A380.
When (if) it get’s into service, you’ll have to hold onto them and use them until the end of their life. Maybe there will be a P2F value somewhere down the line.
It’s already cost them $10bn, taken out of the Deferred Production Costs and does not include monies spent out of the R&D budget. Then there is customer compensation.
The program is at a standstill now.
This is not going well for BA
Boeing management in disarray !!!
solutions
1-sell commercial part to AB at a low price … i.e 1€ as for Bombardier
2- sell space to Elon Musk at the same price
3- sell defense to LM … also same price
4- Rent usable assets to purchaser including buildings
5- as for Bombardier purchasers will carry cost of making valuable products marketable
6- if existing customers wants to buy in China they can get A320 or A350 from Tianjin waiting for Comac to adjust to international norms and global repair shops
:=))