2019 Outlook: Boeing’s decision on NMA is the headline to watch

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Introduction

Dec. 21, 2018, © Leeham News: It is a stretch to say 2019 is a pivotal year for Boeing.

There would have to be events of tsunami proportions to be pivotal for a company with revenues of more than $90bn.

But there is no doubt 2019 will be a very important year for Boeing.

Summary
  • The headline to watch will be the widely anticipated launch of the New Midmarket Aircraft, also called the 797.
  • The 777X begins flight testing next year. Sales are stalled for the newest airplane of the Boeing family.
  • The proposed new joint venture between Boeing and Embraer is expected to be consummated by the end of the year.

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Tanker wars may be back

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Introduction

Dec. 10, 2018, © Leeham News: The tanker wars may be back.

Airbus has teamed with Lockheed Martin to offer the Airbus A330-200MRTT to the Pentagon in a for-hire business model. The agreement also provides the prospect of “conceptualizing the tanker of the future.” (The press release is here.)

From 2001-2011, the US Air Force, Pentagon and even Congress were embroiled in controversy over recapitalization of the USAF aerial refueling tanker fleet.

The KC-135s, based on the Boeing 707, were aging, expensive to maintain and outdated.

After 9/11, Boeing proposed leasing 100 tankers based on the 767-200ER to the USAF. A scandal surrounding the USAF approval of this deal sent the air force’s procurement office and Boeing’s CFO to jail and resulted in the resignation of CEO Phil Condit. The lease deal was canceled.

Summary
  • Three rounds of tanker procurement were filled with improprieties, bitter charges and counter charges.
  • Boeing currently has a contract for 52 KC-46A tankers out of an initial procurement of 179.
  • The air force sees a need for 100 more tankers on an accelerated timeline.
  • Fee-based refueling is not unknown to the Pentagon.

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Boeing cash flows generously, KC-46A snarfs up some of it

By Dan Catchpole

 July 25, 2018, © Leeham News: The cash keeps flowing at Boeing. The aerospace giant posted free cash flow of $4.3bn for the second quarter of the year, despite recording $426m in costs related to its delay-ridden KC-46 tanker program.

Despite posting strong earnings, the charge rattled investors, who drove Boeing’s share price down in early trading Wednesday.

Boeing continues to work on closing the business case for its New Midsize Airplane (NMA), a business case unlike any the company has done before, Boeing chief executive Dennis Muilenburg said in a conference call with reporters and investment analysts.

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Boeing eyes international sales with KC-46A deliveries near

Part 2. LNC visited the Boeing KC-46A Everett Modification Center last month. Part 1 appears here.

July 5, 2018, © Leeham News: Boeing’s contract with the US Air Force for three dozen KC-46A tankers is but the tip of the iceberg.

Installing the refueling boom on a KC-46A tanker at the Everett Modification Center. Boeing photo.

The USAF’s initial plan is to acquire 179 KC-46As, which was part of the KC-X tanker competition Boeing won after a bitter contest with Airbus and the competing KC-30/KC-330 airplane, based on the commercial A330-200. (For simplicity, LNC will refer to the Airbus as the KC-30.)

There are more than 400 ancient Boeing KC-135s that have to be replaced. Boeing figures it will eventually see the initial 179 aircraft requirement expanded to cover the balance of the KC-135s, although due to budget constraints, last year there were reports the procurement will stop and 179 and the KC-135s will be upgraded.

Then there is the international market. Airbus so far is far and away the winner in this sector. It’s sold 57 to eight customers (including NATO); 29 are in operation. The first one entered service in 2011.

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One Boeing, lessons learned from P-8, KC-767 find their way in KC-46A

Part 1. Part 2 will appear July 5.

Boeing KC-46As in the Everett Modification Center for military systems installation. Photo by Scott Hamilton.

July 3, 2018, © Leeham News: Boeing’s development of the KC-46A aerial refueling tanker for the US Air Force is behind schedule and over budget, but production is underway and 34 tankers have been built.

Deliveries are running more than a year behind the original schedule. Boeing is already in production on a fourth tranche of tankers even before the next contract is signed, which is expected this summer.

Finally, after several delays, Boeing and the USAF announced the first tankers will be delivered in October, about 18 months behind schedule.

“In partnership with the U.S. Air Force, our team has made great progress on the KC-46 Tanker,” Boeing said in a statement. “With first delivery now set, the men and women of the Air Force know when they will start receiving this warfighting capability. The KC-46 is a top priority for The Boeing Company, and we have the best of Boeing working to ensure the U.S. Air Force gets their tankers as quickly as possible.”

LNC visited the Everett Modification Center (EMC) this month, speaking with officials of the program, who explained progress on the tanker line.

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Southern state coalition bid likely for Boeing NMA assembly site

June 27, 2018, © Leeham News: A coalition of four Southern US states that joined to win the US Air Force tanker contact site location for Mobile (AL) will likely link up again to bid for the assembly line of the prospective Boeing New Midmarket Aircraft, officials of three of the states said yesterday.

The Aerospace Alliance includes Florida, Alabama, Mississippi and Louisiana.

An official of an economic development commission for Charleston (SC) said Charleston will also likely throw its hat into the ring.

The comments were made at the Leeham Co./Airfinance Journal Southeast Aerospace & Defence Conference yesterday in Mobile. The conference continues today.

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Pontifications: Honoring John McCain

By Scott Hamilton

May 28, 2018, © Leeham News: Today is Memorial Day in the USA, the holiday which honors US Armed Forces who died in active military service.

It seems fitting today to think about US Sen. John McCain (R-AZ), who is dying of the same brain cancer that took the life of Sen. Edward Kennedy.

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Hawaiian orders 787, cancels A330-800; Embraer ponder electric plane, not a jet

March 6, 23018 © Leeham Co.: It’s official: Boeing and Hawaiian Airlines announced an order for 10+10 787-9s. It’s a letter of intent and purchase rights.

The airline also confirmed it canceled an order for six Airbus A330-800s.

 

LNC was the first to report the transactions Feb. 20.

Separately, Embraer confirmed it’s looking at an airplane smaller than the E175, but denied a report originating in another media that it’s a small jet.

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Challenges facing Boeing in 767-300ER passenger restart

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Introduction

Nov. 13, 2017, © Leeham Co.: The clock is ticking toward the end of the year for Boeing to decide whether to restart the 767-300ER passenger line.

Officials want to decide by year-end.

Restarting the line isn’t as easy as one might think. Boeing is building the 767-300ER freighter and it has the tooling for the passenger model. Boeing has several challenges to resolve before any green light for the restart.

Summary
  • There is a space problem at Everett, where the 767 is assembled.
  • Restarting the passenger supply chain is an issue.
  • And, as ever, so is cost.
  • Does Boeing simply restart the line without upgrades, or are upgrades included, which will increase the cost to produce the airplane?
  • Closing the business case on the NMA.

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Boeing’s tactical option for MOM sector

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Introduction

Aug. 14, 2017, © Leeham Co.: It’s not a done deal yet—the business for the so-called Boeing 797 remains a challenge. But the consensus is that Boeing will launch the program next year, for an entry-into-service around 2025.

Boeing 797 concept. Source: Boeing.

Yet there are airlines that say they don’t want to wait that long for a new airplane.

What are their choices?

  • Acquire the Airbus A330-200. It’s available now. Fuel is cheap and is expected to remain so well into the next decade.
  • Acquire the A330-800. It’s fairly cheap. It’s about 10% less expensive to operate on a per-trip basis than the A330-200. The new engines will serve as a hedge against rising fuel prices for an indefinite future.
  • Acquire the Boeing 787-8.
  • Airbus ponders an A321neo+.
  • There’s another option that is not readily apparent.

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