Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- RTX Q1 2025 Earnings: GTF Talk Takes A Back Seat To Tariffs April 22, 2025
- Tariffs Tumult Takes Over GE Aerospace Q1 2025 Earnings Call April 22, 2025
- Boeing reports mixed results of latest employee survey, but middle management and officers remain key obstacles April 22, 2025
- Hopes for 1Q financial progress turns into bumpy ride for Boeing April 21, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 18. April 18, 2025
Odds and Ends: AirAsiaX orders A333; WA and Airbus; Boeing names COO
AirAsiaX orders A330-300s: As forecast earlier this week, the budget carrier ordered 25 Airbus A330-300s. According to reports, AirAsiaX may not be done. Group CEO Tony Fernandes wants Airbus to develop an A330neo. Stay tuned.
Washington State and Airbus: The Associated Press wrote a story about the courtship of Washington State of Airbus, making a link between the Boeing 777X site selection Schizophrenia and the Airbus effort. Some headline writers made an even more direct cause-and-effect link. This vastly overstates what’s been going on. Gov. Christine Gregoire began reaching out to Airbus in 2010, but the effort was stalled by the then-contentious and bitter competition between Boeing and Airbus over the USAF KC-X tanker competition. Gregoire, who was just named chairman of the advisory committee to the US Export-Import Bank, naturally backed the Boeing bid but was wisely measured in her rhetoric when it came to the EADS KC-330 offering. The Washington Congressional delegation, however, was often vitriolic and as a result, Gregoire’s efforts largely stalled.
Once that competition was over in 2011, Gregoire resumed her efforts in the last year of her governorship, meeting with EADS and Airbus officials at the 2012 Farnborough Air Show. The WA Dept. of Commerce had continued efforts throughout. This past summer, Commerce and the Pacific Northwest Aerospace Alliance hosted an Airbus suppliers meeting in the Seattle area, attended by about 120 suppliers (about 30-40 had been expected).
So while the AP story is factually correct overall, any linkage to 777X and the Airbus courtship is overstated. This has been a long-term effort by Airbus, PNAA and it is a concept we called for in October 2009 in a speech before the Governor’s Aerospace Summit just days before Boeing announced it was locating 787 line 2 in Charleston (SC). The Airbus effort, if anything, has more of a link to that event than to the 777X.
Boeing names Muilenberg COO: Dennis Muilenberg, CEO of Boeing’s defense business, has been named COO of The Boeing Co. He is succeeded by Christopher Chadwick. Ray Conner, CEO of Boeing Commercial Airplanes, was named Vice Chairman of the Board and continues in his current position. The press release is here.
McNerney reaches retirement age next year but given the timing, we think he’ll stick around a bit longer to give Muilenberg more time in the #2 corporate position. Since Muilenberg is younger than Conner, we think Muilenberg is the more likely choice for successor.
Another Day, Another 777X story: The obsession continues. Seattle Times columnist Danny Westneat has this commentary worth reading. The Everett Herald has a good wrap up of where things stand in Washington State right now. The Seattle Times looks at Long Beach (CA) in depth and its potential for the 777X.
Odds and Ends: 787 software; Hazy on 777X; 787 reliability; A340 lemon; 777X won’t be built in WA: MO politician; Chinese war games
787 software: Aviation Week reports that continuing software issues bedevil the Boeing 787.
AvWeek also takes a closer look at Japan Airlines’ decision to take the 787 off certain routes due to the icing issues of the GEnx engines. Most incidents occurred on the 747-8 but one happened on the 787. The 747-8 also uses the GEnx engine.
Hazy on 777X: Steve Udvar-Hazy, CEO of Air Lease Corp and one of the most influential people in commercial aviation, offered his assessment of the 777X specifications in an interview with Aviation Week. He also commented on the future of the A350-800 and the prospect of an A350-1100.
787 reliability: Aviation Week also reports about Boeing’s efforts to improve the reliability of the 787.
A340 Lemon: Bloomberg News, tipped by our select e-newletter distribution yesterday, wrote this story about an Airbus summit to discuss the future of the A340 family in the secondary market. We’ll publish our e-newsletter for general readership with an expanded version next Monday in this column.
Boeing will nix WA for 777X: So says a Missouri politician. KOMO TV (ABC Seattle) ran a piece yesterday in which a Missouri politician said all indications they’ve had from Boeing is that the 777X won’t be built in Washington State. The clip is not on the KOMO website, however, but we saw it while watching the news.
Pacific War Games: “War is Boring,” a blog, ran a war game involving the current Chinese action declaring a defense identification zone in airspace between China and Japan. We’ve no clue over the quality of this blogger or the war game, but we were reminded that the Pentagon had war game scenarios that were important in the KC-X competition. This was one reason the Northrop Grumman-EADS KC-330 MRTT won the competition (later overturned)–because of the vast distances involved in the Pacific and the assumption that China may be successful in a conflict of what’s called Anti-Access, Access Denied (A2AD) that would have isolated US bases in Guam and Japan. The USAF concluded the EADS KC-330’s longer range vs Boeing’s KC-767, greater loiter time and greater refueling capacity was important to the selection.
Loyalty is a one-way street at Boeing
Boeing’s move to shop around the 777X assembly site, while telegraphed and certainly expected, is another example of the shifting loyalties at Boeing that have been more than a decade in the making.
Before we start, it must be acknowledged that Boeing is a publicly traded stock company and it has fiduciary duties to make sound financial decisions. That being said, one can debate endlessly whether the decisions executives have made have been financially sound (and there is ample evidence with respect to 787 outsourcing and opening a second line in Charleston that the decisions were not sound). Setting aside this debate, since Boeing moved HQ to Chicago in 2001, loyalty appears a thing of the past.
USAF considers scrapping KC-10 in sequester
KC-10 scrapping: The US Air Force is considering scrapping the KC-10 aerial tanker fleet as a result of budget cutbacks in the sequester, The Army Times reports. This is stunning news, considering the seven year battle to recapitalize the Boeing KC-135 tanker fleet.
There are 59 KC-10s, based on the McDonnell Douglas DC-10. McDonnell Douglas merged with Boeing in 1997.
Boeing one day hopes to develop a tanker based on the 777-200LRF to replace the KC-10 and we expect Airbus Military will offer the A330 MRTT or even a tanker based on the A350, but we certainly didn’t expect any prospect of retiring the KC-10 prematurely.
FedEx takes first 767-300ERF; sources say readies 767-2CF order
FedEx took delivery of its first Boeing 767-300ERF yesterday.
Boeing Photo
As we reported way back on June 16, our market intelligence tells us FDX is lined up to become the first commercial customers of the 767-2C, the new platform on which the KC-46A tanker is based. The 767-2C is about six feet longer (165 ft 6 in) than the 767-200ER (159 ft 2 in) on which the 2C is based but shorter than the -300ER.
Boeing rendering
Separately:
- Aspire Aviation has a long analysis of the DOJ lawsuit against the American Airlines-US Airways merger that further decimates the heart of the case.
Odds and Ends: More on the A380; KC-30 boom still a problem
More on the A380: Bloomberg News has this story on Airbus’ efforts to increase sales of the A380, focusing on selling it with increased seating.
KC-30 Boom: Airbus Military still has problems with the refueling boom on its KC-30, some two years after delivery to Australia. Long-time Readers will recall that Airbus’ inexperience with designing the book was one key criticism by Boeing in the interminable KC-X tanker competition.
Boeing’s future in Puget Sound, Washington–maybe Airbus, too
Yesterday we opined that the Boeing “exodus” from Washington State is a tad overblown so far. Here’s why we think so.
- As long as the airplane programs are derivatives of in-production aircraft, Puget Sound’s place in aerospace is solid. We don’t think the 777X will be assembled anywhere but here, just as MAX–a derivative of the 737 NG–was certain to be assembled here (and it was). The debate, such as it was, over where to assemble the MAX was in our view nothing more than making the airplane a pawn in the labor dispute with IAM 751 and the NLRB lawsuit over the second 787 assembly line. IAM dropped the suit in exchange for the MAX. Or so it appeared.
- So what if the 787-10 is assembled in South Carolina? Boeing has to take production to 14 a month, in our view, in order to accommodate the 787-10 and to open up delivery slots for the 787-9 and 787-8. We think this means seven 787s a month at Everett and seven at Charleston.
- Demand for the 737NG and 737 MAX is such that Boeing has to take production rates higher. The Renton factory has the capacity for 63/mo.
- Demand for the KC-46A tanker may boost rates on the 767 line. Also, as we previously reported, Market Intelligence tells us FedEx is preparing to order the civilian freighter version of the KC-46A, the 767-2C. This also means higher rates.
- In fact, our Market Intelligence tells us Boeing is already reaching out to the supply chain to plan on production boosts for the 737, 767 and 787 lines.
Source: Leeham Co. Market Intelligence. 777 and 747 rates not included.
Will Boeing continue to shift jobs from unionized Washington to non-union states? You betcha. But if these production rates come to pass (and the supply chain will have to gear up to meet these rates), not only will Boeing be adding jobs but so will the suppliers.
Airbus is talking to suppliers about similar rate hikes. For Washington, this means more jobs, to0, because our state is the No. 2 US supplier to Airbus by company count.
The Seattle Times reports that Airbus may consider opening an engineering center in Washington.
Note the comment about the USAF tanker in the story. We asked Gov. Jay Inslee about his relationship with Airbus during a conference call Wednesday, the final one held by the State to recap its daily activities at the Paris Air Show. Inslee bowed out of the trip to deal with Washington’s lack of a budget.
When he was in Congress, Inslee was one of the most vociferous opponents of the Airbus/EADS bid for the USAF tanker in competition with the Boeing KC-767. Inslee introduced legislation to require the Air Force to take into account WTO findings that Airbus received illegal subsidies for the A330, the plane on which its tanker design was based. Even the US Trade Representative’s office said such legislation violated WTO rules and the effort went nowhere.
Inslee’s efforts at the time offended Airbus officials, who were considering holding a suppliers fair in Washington, which is the No. 2 US supplier to Airbus. Because of the vitriolic opposition by Inslee and other members of the Washington delegation, Airbus shelved consideration of the fair.
We asked Inslee Wednesday how he might mend fences now that he is governor, seeking to expand our supply chain business with Airbus. Inslee was beginning to answer when US Rep. Rick Larson, who was leading the State’s Paris Air Show delegation in Inslee’s absence, interrupted to say he had talked with McArtor, who said the tanker wars were over.
Airbus has a suppliers event scheduled here next month.