Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing’s 737 North Line and the Everett factory: in transition now June 9, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 25. June 6, 2025
- New RISE powerplant benefits from decades of GE research and development June 5, 2025
- Engine makers emphasizing durability, reliability June 4, 2025
- Boeing CEO: Lessons learned are key to certification of 737-7/10 and 777X June 2, 2025
787 stands down suppliers third time
Boeing has implemented its third, 30-day stand-down for its supply chain on the 787 program. Says Boeing:
As we have previously indicated, when opportunities arise we distribute flow in our production system to make the most efficient use of resources by ourselves and our global partners. We periodically align our production plans to meet adjusted customer needs, taking advantage of this flexibility in the market to further strengthen the 787 production system. This technique of balancing deliveries to most efficiently manage flow and customer requests within the production system is a common practice for our airplane programs.
A350: Development is running 6-8 months late, says a key supplier. This supplier believes there is still a chance Airbus will deliver the A350 in 2013, as promised, but it will be close.
Tanker update
It’s been a while since we’ve talked about the KC-X tanker competition, which is coming to the forefront again with the issuance of the Interim Report on Boeing subsidies by the WTO.
- Flight International has this story citing Ralph Crosby, chairman of EADS North America, talking about costs and process in the competition.
- The Telegraph of the UK has this story about the boondoggle lease deal of A330 MRTTs for the Royal Air Force. A reminder of how lease deals such as that proposed by Boeing in 2001 for the USAF (and killed because of the pricing and improprieties) can be way too costly, the UK MRTT deal is also an example of how dopey specifications can ruin a good idea. The UK DOD didn’t require combat-ready specifications (note to critics: this wasn’t an Airbus failing but a Department of Defence failing) for the MRTT. The UK situation also is indicative of old tanker-transports in need of replacement, just like the US KC-135. Most notably of the parallels is this statement in The Telegraph’s story: But in an era of budget shrinkage, how we buy equipment is as important as what we buy. The AirTanker deal is only the most obvious example of a procurement process that takes too long, costs too much and, even then, doesn’t always give us what we’re supposed to get.
Boeing WTO report due today
Update, 6:45pm PDT: Dominic Gates of The Seattle Times updated his 12:45pm snippet eight minutes ago with far more detail, and as of this moment represents the most detailed news report we’ve seen.
As before, both sides are in major spin control, and as before, we will continue to withhold our judgment until the Final Report is issued months from now. But we will note that in the Airbus case when the Interim Report was issued, it turned out the USTR/Boeing spin was (in our judgment) more on target overall than was the EU/Airbus spin.
Update, 4:30pm PDT: Boeing issued a follow-up statement, reproduced after the jump following their advance statement.
Update, 3:00pm PDT: As we did when the US complaint against Airbus came out, we are largely withholding our commentary because we don’t have access to the Interim Report and neither do the Airbus and Boeing spin machines, nor the politicians.
We urge caution in drawing conclusions. The various updates below show the wide variations of what is contained in the reports and we are skeptical of what any vested interest has to say.
We will withhold any of our definitive opinions for what will amount to months, when the Final Report comes out next year.
Update, 10:15 AM PDT: The first actual detail of the WTO Interim Report has leaked, with the BBC providing this report. Boeing got $20bn in illegal aid, says BBC.
BBC reports that $4bn in Washington State tax breaks are part of these.
10:30 AM PDT: As with the Airbus case, both sides are claiming a win.
Update, 12:45 PM: The Seattle Times reports Reuters (and, apparently, the BBC) had the amounts of the illegal subsidies provided Boeing as vastly overstated, and closer to $3bn instead of the $20bn initially cited by Reuters and BBC. If this set of leaks is accurate, this would be a clear victory for the US and not Europe, giving the US essentially two major victories. This could also be a big relief for the State of Washington. Although Gates’ story doesn’t detail precisely what was found illegal, the amounts cited cast doubt on just how much–if any–of the State tax breaks were illegal.
Update, 2:45 PM: The Financial Times of London has a story (free registration required) that paints a very different picture than The Seattle Times and US Boeing partisans. The Financial Times puts specific numbers on the findings, including a reported $5.7bn of illegal subsidies on the Boeing 787 alone. This is more than The Seattle Times is quoting for the entire Interim Report, based on the information it received.
The specificity of the numbers in The Financial Times is important vs. the generalities of some of the other report and statements, including those of the USTR.
Original Post:
The long-awaited and thrice-delayed WTO Interim Report on the alleged illegal subsidies provided Boeing is due to be issued to the EU and US governments today.
The Interim Report is confidential, but leaks are expects, just as they were when the WTO issued the Airbus report. It will be months before the final, public report is issued.
Boeing has already issued a statement in advance of the report (see after the jump). We’ll follow this throughout the day.
For Washington State, the $3.2bn in tax breaks (over 20 years) provided Boeing for the 787 are expected to be a major part of the case.
Here are a couple of selected stories in advance of today’s events:
KIRO-TV (Seattle): Boeing rejects negotiations.
Wall Street Journal: Boeing likely to lose WTO ruling.
AFP (France): Titantic battle goes to the wire.
Reuters: EU Win unlikely to dampen US push over Airbus.
777-300ER, 737-800 top Airfinance Journal poll; A330, A320 close behind
Boeing’s 777-300ER once again topped the poll by aviation financial trade magazine Airfinance Journal, which has been doing the polling for as long as we can remember.
On a scale of 0-5, the 777 ranked 4.2, followed closely (but under 4.0) by the Airbus A330-200 and A330-300.
AFJ polls investors who finance or buy airplanes for their preferences.
Gary Liebowitz of Wells Fargo Securities published the rankings in his latest Liebo’s Leasing Letter.
Voice of Watergate Past: Tanker date may be “inoperative”
It never ends.
Reuters has this story that the tanker award date may slip from the November 12 dated, but we shouldn’t be surprised, since we suggested as much quite a while ago.
What caught our attention is the wording of the USAF statement, as reported by Reuters:
US appeal of Airbus WTO ruling aimed at A350, future of A320
There is been some perplexed reaction to the appeal by the US Trade Representative to the World Trade Organization that the USTR and Boeing claimed only a few months ago were sweeping victories in the complaint that Europe had illegally subsidized Airbus over four decades.
There shouldn’t be any confusion; the answer is simple. Say “A350” and “A320.”
To be sure, the US won most of the important points it challenged but as Airbus, its parent EADS and the European Union pointed out at the time—and which we reported—the US failed to prevail on the all-important point that launch aid, per se, was illegal.
The US appealed this finding, as well as findings that certain financial aid provided by France for the A380 development was not illegal export subsidies. The US also has appealed this finding.
Here’s what Airbus said Friday in response to the US appeals:
RR speaks out on NEO vs new airplanes
Rolls-Royce speaks out on its views of Airbus and Boeing going with a new engine option for their A320-737 class airplanes in this long Wall Street Journal article.
We’ll make two observations: