Leeham News and Analysis
There's more to real news than a news release.
US ExIm financing under attack again; killing it would aid Airbus
US Export-Import financing is under attack again by Delta Air Lines and Republicans.
We understand why Delta is opposed. It believes that ExIm financing of Boeing aircraft to competitors puts it at an economic disadvantage.
But fees charged by ExIm made financing more costly and “market rate,” a move intended to remove the financing advantages. Some airlines, in fact, chose alternative financing as a result.
Delta claims ExIm hasn’t taken into account the impact on losing American jobs. We find this a stretch, since Boeing out-sources thousands of jobs with its industrial partnerships (particularly on the 787) and supply chain contracts. At one time, we seem to recall Delta out-sourced jobs to non-US locations.
Be that as it may, at least Delta has its self-interest at stake and one can’t truly fault the airline for this. But the Republicans are another matter. Although ExIm finances a variety of US industries, Boeing is the prime beneficiary and some Republicans claim this is nothing more than corporate welfare.
ExIm, which has been around since the Great Depression, provides financing that is similar to European export credit support offer to Airbus customers. If Republicans succeeded in killing ExIm (or if Delta does), then Airbus will have a clear advantage.
This falls into the category of “what are they thinking??”
Separately:
McNerney on unions and other stuff; where will 777X be built?
Note to Readers wishing to comment: See this article and our Comment #35 and be forewarned.
Boeing CEO Jim McNerney is cited in the Puget Sound Business Journal on labor unions, China and other stuff from his appearance at an aerospace summit.
In the article, McNerney tries to take a moderate stance on unions. But just this week Boeing announced it is moving SPEEA and other union jobs out of Puget Sound, here and here. The moves resulted in a blast from Seattle Times columnist Jon Talton here, and our response here.
Production is booming in Seattle’s Puget Sound, but it’s clear to us that Boeing is engaged in a long-term strategy to build up Charleston as a major, second production plant–not just a 787 production line. We see Charleston-as-to-Seattle as Hamburg-is-to-Toulouse some day. We don’t see Everett shutting down (at least not in our lifetime) because there is too much there. We think Renton is more at risk, once there is a New Small Airplane finally designed to replace the 737–but this is well into the next decade.
The question over where the 777X will be be built is, to us, a little more vexing. Logic says build it here, given the similarities between the baseline 777 and the derivative 777X. This is no different in principal than the 737NG and the 737 MAX–it would have been silly to build it elsewhere.
But McNerney’s comments about labor in the Business Journal notwithstanding, the anti-union sentiment at Boeing Corporate is obvious for all to see.
The future of the 747-8 is in jeopardy. Boeing said as much in its 2012 10K:
Flaws escape FAA certification
Bloomberg has a good story looking beyond the Boeing 787 issues at the FAA’s reliance on industry to certify airplanes. The story details a number of cases where flaws crept through the system, leading to deaths–a circumstance, of course, that did not happen with the 787.
We have written a couple of posts about the relationship between the FAA and industry in response to focus following the 787 battery issues. We pointed out this relationship is nothing new.
The Bloomberg piece is well worth reading.
Odds and Ends: Independents like battery fix; 787 test flight today?; JAL and A350; PAL and 777X
Back to the 787 batteries: The Seattle Times had this story Saturday in which it talked with independent experts who like the battery fix proposed by Boeing. The Time also reported that the first of two test flights might occur today.
JAL may buy A350s: Japan Air Lines may buy 20 Airbus A350s, according to this news report. The aircraft would replace Boeing 777s, according to this report.
Hawaiian firms A321neo order: It was announced in January as an MOU and now Hawaiian Airlines has firmed up its order for 20 Airbus A321neos for use between the Islands and the US West Coast.
Philippine Air Lines may buy 777x: PAL may buy the forthcoming Boeing 777X, looking at the 400-passenger 9X version.
Bombardier investors’ day: CSeries focus
We’re pretty tired of the Boeing 787 stuff, but it’s a story that simply is a daily occurrence. So it’s with some relief we have something else to talk about today.
Bombardier held an investors’ day today (March 21). Here are some links and documents. The day was for all of Bombardier, but we’re just focusing on Aerospace.
Aviation Week has this article from the March 7 CSeries “reveal.”
Here’s a link to a 43 page PDF (PPT) presentation about the Aerospace division. This includes Business Aircraft and the entire commercial line.
One graph shows the current line-up of single-aisle aircraft (click to enlarge):
BBD has been under cash flow and stock price pressure in recent years, and terms this year as a “turning point.” The first flight of the CS100 is scheduled for June; officials say the end of June but we believe they will move heaven and earth to have the plane flying by the Paris Air Show mid-month.
BBD hopes to have power-on for the CS100 Flight Test Vehicle 1 (FTV 1) this week or next. Fly-by-wire testing has been underway this week.
At the investors’ day, Ben Boehm, VP Strategy and Business Development, said much of the up-gauging we’re seeing in aircraft selection today is in the 150-210 seat segment. Within the 100-149 seat sector, Boehm says BBD has yet to lose a competition to Airbus or Boeing.
Philippe Poutissou, VP Marketing, said that as an airline gets to 20 or 30 aircraft, fleet commonality benefits diminish. The biggest aircraft is the benefit of pooling and spares. “As you get into the 20s, 30s and 40s, the incremental benefit of commonality gets quite small.”
Odds and Ends: Post-SPEEA Vote; LionAir and RyanAir; ANA skeptical of Boeing timeline
Post-SPEEA Vote: The ratification of the contract offer by Boeing by the SPEEA technical workers is welcome news. It gives Boeing and its stakeholders certainty at a time when the 787 issues remain outstanding and the developmental programs of the 777X, the 787-9 and 10, the 737 MAX and the KC-46A are at important stages. Although SPEEA took a loss over the pension issue, the union was able to extend the previous contract provisions over economic issues for another four years. Call this a draw for the two sides.
LionAir and RyanAir: On Monday Airbus announced an order for 234 A320ceo/neo family members from LionAir, previously an all-Boeing customer. Today Boeing announced an order for 175 737-800s from RyanAir, an exclusive Boeing customer. There were no MAXes in the order, however. RyanAir CEO Michael O’Leary has not been a fan of the re-engined 737.
ANA skeptical of 787 timeline: Reuters has an interview with All Nippon Airways in which it expresses some skepticism about the Boeing timeline of returning the 787 to service within weeks. ANA calls this a “best case” scenario.
On the other hand, LOT, which took the 787 out of its schedule through September, now says the airplanes could be back in service by summer.
Vote in the Polls: All Nippon Airlines has begun its effort to rebuild the 787 brand flying in its colors. Boeing began its effort last week. Is the view of the 787 turning? If you haven’t already done so, please be sure to vote in these polls (scroll down after clicking the link).
Paine Field Pleads its Case: Targeted for closure in Sequester, with a decision to be announced this week, the director of Everett Paine Field pleaded his case to remain open in this letter: FAA Tower Closure – Paine Field (1).
Well wishes: Daniel Tsang, founder of Aspire Aviation, has been hospitalized in Sydney, Australia, with an unknown ailment first thought to be measles but it’s not. Well wishes to him.
Odds and Ends: Second SPEEA vote results tomorrow night; Big LionAir-Airbus order finally ready
SPEEA vote tomorrow night: Update: Tomorrow is now today; the SPEEA vote results will be counted tonight (Monday).
The revote by SPEEA technical workers will be counted Monday night. Technical workers rejected the best and final offer from Boeing last month and authorized a strike. The professional engineers accepted the contract but authorized a vote, a technical maneuver that became moot with contract acceptance.
The issue leading to rejection was Boeing’s desire to shift from a defined pension plan to a defined contribution for new employees.
Boeing refused to improve its offer. Without the backing of the professionals, we think the technical workers will vote to approve the contract this time.
Vote results will be well into the evening.
Big Airbus-LionAir Order: At long last, the huge order we first referred to September 24 last year appears ready to be announced Monday, Paris time. Reuters, The Wall Street Journal and French papers are reporting the deal will be announced tomorrow. It’s for A320s (neos, maybe some ceos) and breaks Boeing’s monopoly with LionAir and the 737/737MAX. This is a huge win for Airbus.
Odds and Ends: AF 447 resurfaces; Racing toward 2,000; A400M; beating back anti-droners
Air France 447: More data has surfaces on Air France 447, the Airbus A330 that plunged into the Atlantic on a flight from Brazil to France several years ago. In a cooperative post-investigation that included Airbus and Boeing, efforts to replicate the crash in a simulator failed.
It separately emerged that the pilot of the flight had one hour of sleep and the co-pilots also didn’t have the requisite sleep.
Racing Toward 2,000: At ISTAT, Airbus COO Customers John Leahy said he expected to gain another 200 orders this month for the A320 family, reaching 2,000 orders for the neo in the process. Lufthansa and Turkish have since announced orders.
A400M certified: The troubled Airbus A400M has been certified.
Beating back anti-droners: Boeing and supporters killed legislation in Washington State that would have outlawed drones. Boeing’s subsidiary Insitu is headquartered in Washington and considered leaving to Oregon, across the Columbia River. A coalition is also working to have Moses Lake (WA) selected as a drone testing site under an FAA program.