Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- China bans Boeing, US parts imports in tariff war April 15, 2025
- Boeing welcomes COMAC competition as Asia-Pacific demand soars April 15, 2025
- How good is the C929? April 14, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 17. April 11, 2025
- Uncertainty plagues airline, aerospace, lessor industries over tariffs April 10, 2025
Airbus 2024 results: “A decent year in a challenging environment”.
By Bjorn Fehrm
February 20, 2025, © Leeham News in Toulouse: The headline uses the words of Airbus CEO Guillame Faury when he opened the presentation of Airbus 2024 results in Toulouse today. It was a session where Faury and the CFO Thomas Toepfer put in an effort to let all present international journalists and their online colleagues ask all questions and deliver honest answers.
On the business-as-usual side, the company delivered 766 aircraft, which was within the guidance, after a deep grab effort in 4Q, leading to low deliveries for 1Q2025. EBIT at €5.4bn and Free Cash Flow at €4.5bn were also within guidance.
In general, the Commercial airplane side was fighting specific supply problems during 2024, which might limit the ramp-up of A350s and A220s going forward, more of which below. Helicopters have now recovered from challenging times and delivered a solid result. Defense and Space are strong in Air Power (fighters, etc.), given the tense European situation, with Space going through restructuring, which might include mergers with other European space players.
The real news was the reasons for pausing the CityAirbus eVTOL program, according to Faury, “not only because batteries were not where they should have been but also due to the lack of a market for this type of transportation.” As the world’s largest supplier of helicopters, Airbus is a credible source for such a lack of market statement.
Faury also detailed what is happening on the Hydrogen side. Due to slower-than-expected progress in Green Hydrogen production build-up, deployment of preparatory Ground Support Equipment (GSE), and Transportation using hydrogen at the airports in their H2 partner network, Airbus has decided to push out the entry into service of a “commercially viable hydrogen aircraft” by five to ten years.
However, said Faury, it has made progress. “We have reached TRL 3 for the tecnobricks, which has enabled us to select the Fuel Cell path as the preferred way forward. This means these activities are continued at the present level or even intensified, but it also means other paths (read Hydrogen burn) are ramped down. Overall, it means a decrease in R&D spending for Hydrogen activities in the coming years.”
Read more
Tier 1 suppliers are a “failed market”
Subscription Required
By Scott Hamilton
Feb. 20, 2025, © Leeham News: The Tier 1 supply chain is all but dead.
Kevin Michaels.
This rather startling conclusion belongs to Kevin Michaels, the managing director of the consulting firm Aerodynamic Advisory. When he explains his thinking, it supports a major shift in the aerospace industry.
He made his remarks at the Pacific Northwest Aerospace Alliance conference this month in the Seattle area.
Tier 1 supplies are the last step in the supply chain, delivering products directly to the Original Equipment Manufacturers (OEMs), such as Airbus, Boeing, Embraer, and the engine makers.
Michaels said the supply chain is “fragile” and “red hot.” “Overall, the supply chain is in better shape than it was last year at this time. It’s in better shape now than it was two years ago. But it’s still incredibly fragile.” OEMs purchase about 75% of the value of the aircraft from the supply chain. Aerostructures are the first tier. And this is where Michaels’ rubber hits the road.
Another One Bites the Dust; alternative energy gives way to realities
Grounded: Eviation’s Alice, a concept that had more questions than answers. Credit: Eviation.
By Scott Hamilton
Feb. 18, 2025, © Leeham News: Universal Hydrogen. Lilium. Volocopter. Tecnam’s electric airplane. Airbus electric. Airbus hydrogen. ATR hybrid.
Eviation was just the latest alternative energy project to bite the dust.
And these are just the ones we’ve heard about.
Boeing declined comment on the status of its WISK autonomous electric air taxi. Its future may have as much to do with the company’s current financial condition and efforts to recover from a series of crises since the March 2019 grounding of the 737 MAX than with technology or business model concerns.
The alternative energy aviation industry, the soup du jour in recent years, is running out of gas, so-to-speak. LNA’s aerospace engineer, Bjorn Fehrm, predicted years ago that battery-, and hybrid-powered airplanes were concepts that wouldn’t fly and that hydrogen’s availability at airports is tough nut to crack.
The International Air Transport Association in October 2021 adopted a goal for the airline industry to achieve net zero carbon emissions by 2050. Aggressive milestones also were adopted. Included were ambitious goals to significantly increase the use of Sustainable Aviation Fuel (SAF), the path favored by Boeing.
Tim Clark, the president of Emirates Airline, said then, Don’t make promises you can’t keep.
The industry, it now increasingly admits, can’t keep these promises.
Spirit Aero teeters on bankruptcy, but what’s new about that?
By Karl Sinclair
Feb. 10, 2025, © Leeham News: Spirit Aerosystems (SPR) of Wichita (KS) filed an 8-K report with the Securities and Exchange Commission today with a troubling statement in its Investor Presentation:
“Due to Spirit’s cash flow and liquidity position, management expects to make a going concern disclosure in its 2024 Form 10-K. The Company anticipates that it will conclude in its 2024 From 10-K that there is substantial doubt about its ability to continue as a going concern.”
Going concern is an accounting term indicating that a corporation has serious doubts about its ability to continue operations for the next year.
Given Spirit’s important position as a Tier 1 supplier for Airbus and Boeing, this is a troubling development for both OEMs. But it’s not unexpected. Airbus and Boeing have been propping up Spirit for years with hundreds of millions of dollars in advance payments or loans. Without them, Spirit probably would have filed for bankruptcy long before now.
Trump vows to add tariffs to aluminum and steel; Airbus, Boeing, suppliers will be impacted
By Scott Hamilton
Feb. 10, 2025, © Leeham News: President Donald Trump announced plans to impose a 25% tariff on imported aluminum and steel this week, including from the USA’s largest supplying countries: Canada and Mexico.
According to Trump’s weekend announcement, China will be tagged with a 10% tariff. Other countries also export these products to the USA, but Trump didn’t mention any.
In the aerospace industry, Boeing and Airbus will be affected. So will suppliers to the two companies.
Boeing sees achieving pre-MAX grounding production rates 8 years later
Subscription Required
By Scott Hamilton
Jan. 30, 2025, © Leeham News: When Airbus began to record more orders than Boeing in the early 2000 decade, Boeing’s CEO dismissed the shift.
Orders didn’t matter, sniffed Phil Condit. Only deliveries mattered. The statement ignored the obvious: if you didn’t have orders, you wouldn’t have deliveries.
For much of the past two decades, Airbus has been delivering more airplanes than Boeing. According to both companies’ forecasts, this trend will continue in the heart of the market in the coming years by a wide margin.
Deliveries of the 737 MAX are key to Boeing’s financial recovery. The cash flow and profits from the MAX line will drive Boeing’s ability to develop a new airplane. (This does not ignore the necessity of Boeing’s defense unit to get its financial house in order.)
Kelly Ortberg, Boeing’s CEO, appeared on the financial news network CNBC this week and said Boeing hopes to return to a production rate of 38/mo in the second half of this year.
“I’m not going put a date on when we need to get to rate 38 and get approval for the FAA to go beyond,” he said. “It’s more important that we do this right; we have a stable production system, we get through that, and I expect by the second half of the year, we’ll have that approval, and we’ll be moving to a higher production rate.”
Rate breaks in 5 every six months
Ortberg added, “Well, we’re planning to be at about 38 a month for the balance of this year, ramping up, and we’ll go in five-step increments every six months after that. On 787, we’re at five a month rate, moving to seven a month rate…hopefully, that’s in the next quarter or so.”
The 737 data can be extrapolated to suggest Boeing will return to the pre-MAX grounding rate (52/mo) in the first half of 2027. (Others are skeptical, and the ramp-up appears aggressive.) This would be eight years after the MAX was grounded on March 10-13, 2019, for what turned out to be 21 months.
Boeing was on its way to a rate of 57/mo by the end of 2019. Under the Boeing plan, this rate won’t be achieved until the end of 2027. If Boeing still believes demand supports this rate, a higher rate of 63/mo that was planned pre-grounding would follow in 2028.
Airbus will also increase its production rate. Production and delivery forecasts appear to place Boeing at a permanent distant second to Airbus as long as the competitors are the A320neo and 737 MAX.
777 P2F market grinds to a halt: lack of feedstock, Boeing, war, money to blame
Subscription Required
By Scott Hamilton
Jan. 27, 2025, (c) Leeham News: Boeing’s inability to deliver 787s on time and continued delays in certification of the 777-9 mean airlines planning to replace aging aircraft or expand must retain older aircraft longer than expected.
Airbus’ inability to deliver the A350 on planned schedules also affects fleet renewal and expansion plans, but to a much lesser extent than caused by Boeing.
IAI’s Big Twin Boeing 777-300ERF. Credit: IAI.
Boeing’s circumstances also mean that feedstock intended for conversions of 777-300ERs from passenger aircraft to freighters upset the business models of the three P2F conversion companies: IAI Bedek, KMC, and Mammoth Freighters.
Finally, certification of IAI’s conversation program is running two years behind schedule, and Boeing’s reluctance to license critical flight control software has also stalled P2F programs.
In addition to the problems outlined above, the inability to convert the big twin 777-300ER to freighters or receive new 777-8Fs and A350Fs in the coming years means that 747-400 freighters, which are gas-guzzlers by today’s standards and expensive to maintain, must remain in service longer than planned.
It’s a bleak picture emerging for the near- to-mid-term freighter market.
Earnings: Pay closer attention to the supply chain than to the OEMs
Subscription Required
By Scott Hamilton
Jan. 23, 2025, © Leeham News: Earnings season begins today. Among the companies followed by LNA, GE Aerospace and Hexcel report today. RTX and Boeing report next week. ATI and Spirit AeroSystems follow the week after. Other suppliers follow then.
Airbus doesn’t report until Feb. 20. Rolls-Royce reports on Feb. 27.
The manufacturers draw the headlines, but LNA found long ago that the supply chain often provides better information to draw conclusions about the future than listening to the OEMs. All it takes is one supplier to fall down on the job to muck up the works for the OEMs.
That’s not to say listening to the OEMs is not important. Clearly, it is. But there’s just no getting around it: the credibility of many of the OEMs is damaged. Airbus hasn’t hit its production ramp up targets in years. Quality control suffers. And deliveries are consistently late.
Steven Udvar-Hazy, executive chairman of the board for Air Lease Corp, says that every single Airbus aircraft, 250 of them, has been late since 2017. That’s long before the pandemic began in March 2020, which caused such disruption continuing to this day. Airbus was still delivering A320ceos during 2017 and 2018, which didn’t have engine issues.
Boeing’s credibility speaks for itself. It doesn’t matter that it has a new CEO. Until Boeing starts performing, anything it currently says is hope, not performance. Post-strike delivery recovery will be an important indicator of Boeing’s performance in the essentially truncated fourth quarter and January.
Suppliers often discuss information on their earnings calls that provides a better understanding of production rates at the OEMs and where downstream issues are or are emerging.
A321neo continues upward market share; good luck hitting rate 14/mo for the A220
Subscription Required
By Scott Hamilton
Jan. 20, 2025, © Leeham News: The A321neo continues its climb as the dominant single-aisle airplane in the Airbus family.
Figure 1. Airbus A321neo deliveries overtook all its single-aisle deliveries beginning in 2023 and continued to climb last year. Credit: Leeham News.
Given Boeing’s continued inability to deliver its 737 MAX single aisles at pre-grounding rates in early 2019 and the inability to certify and deliver the MAX 7 and MAX 10, comparisons are irrelevant.
The A321neo became Airbus’ dominant narrowbody aircraft in 2023. The upward trajectory gained momentum last year. The A321 is compared with the A320neo, the largely irrelevant A319neo, and the A220. A220 deliveries are overwhelmingly for the -300 model, with the -100 model, like the A319, largely irrelevant.
Airbus wants to increase production of the A320 family to 75 per month by 2027. It has studied boosting rates to 83 per month. Supply chain and engine delivery constraints caused Airbus to push the 75 rate to the right. There is no projected date for increasing to rate 83.
Airbus also wants to increase production of the A220 to 14/mo next year. Supply chain and engine delivery issues have also hurt boosting rates. Regardless, the goal of 14/mo next year seems unrealistic, given the current rate, which is believed to be around six or seven a month.
2025 remains another year for recovery in commercial aerospace
Subscription Required
By Scott Hamilton
Jan. 6, 2025, © Leeham News: Don’t look for any dramatic new product launches in 2025.
Nor should you expect any dramatic news, absent global upheaval of some kind.
This year is going to be yet another year dominated by recovery. Recovery from the COVID-19 pandemic, which officially ended in 2022. Recovery by the supply chain. Recovery for Pratt & Whitney’s nearly decade-long problems with its Pure Power GTF engines supplying the Airbus A220, A320 family and Embraer E2 jets. Recovery by Airbus from its production and delivery delays. Recovery by Boeing from its series of self-inflicted crises, now beginning the sixth year.
There is just no getting around the fact that the commercial aerospace industry isn’t a smooth-running industry. It’s a long way from 2018, when all sectors were running smoothly. There is still a long way to go to recovery.
Here’s LNA’s take on what’s to come this year.