Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: Air Transport’s route to 2050. Part 21. May 9, 2025
- Does an A220-500 need a new wing and engines? Part 2. May 8, 2025
- Embraer downplays tariff impact on 2025 results May 6, 2025
- JetZero readies effort for private equity fund raising May 5, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 20. May 2, 2025
Earnings: Pay closer attention to the supply chain than to the OEMs
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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
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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
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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.
“What’s past is prologue.” –William Shakespeare.
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By Scott Hamilton
Dec. 16, 2024, © Leeham News: A new airplane from Airbus or Boeing is years away.
Engines drive whether a new airplane program makes sense. Technology just isn’t “there” yet. In any event, Boeing can’t afford to fund a new airplane program even if it wants to. Furthermore, until its stored inventory of 737s and 787s are cleared, or mostly so, production rates are back to 2018 levels, debt is substantially reduced, and profits and cash flows return, Boeing is mired in recovery from the past. Addressing the future must wait.
Airbus has no incentive to rush into a new airplane program, even if engine technology was available. Its backlogs extend into the 2030s, and it can’t meet the current demand. Production is mired in delays for the A320 and A350 families.
Both companies, and Embraer, remain adversely affected by supply chain parts delays.
Airbus CEO Guillaume Faury previously said he doesn’t see the company moving forward with a new airplane until 2035-2040. Additional insight into the company’s thinking came last month at the Aviation Forum 2024 in Munich, where vice presidents of Airbus’ propulsion and new programs departments outlined what’s ahead.
Boeing, Airbus still struggle with supply chains and personnel shortages
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By Scott Hamilton
Dec. 13, 2024, © Leeham News: It’s been two years since the generally accepted end of the COVID-19 pandemic. But the aerospace industry hasn’t fully recovered. Nor will it do so for some time to come.
Predictions suggest another year or two will be required to restore pre-pandemic employment levels within the supply chain. This isn’t even certain. What is certain is that the impact of inexperienced new hires in the meticulous aerospace requirements will linger on for years to come.
Michael Haidinger, President of Boeing European and Middle Eastern regions. Credit: Boeing.
Michael Haidinger, president of Boeing’s European and Middle Eastern regions, and Juergen Westermeier, chief procurement officer for Airbus, agree challenges remain in the near future.
“There is always a shortage of skilled aerospace talent intensified by the pandemic,” Haidinger said this month at the annual Aviation Forum (2024) in Munich, Germany. “As all the professionals retired, fewer new employees entered the field. Our industry needs more people who not only bring expertise but also embrace the mission of advancing aerospace.”
Haidinger added, “The deficit of skilled engineers, technicians, and other aerospace workers has made ramping up production more challenging. Attracting and retaining talent has become a top priority for us. [We are] with many companies investing in workforce development, partnerships with universities, training programs, and apprenticeship programs.”
Airbus procurement head “convinced” supply chain issues are on right path
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By Scott Hamilton
Juergen Westermeier, head of procurement for Airbus. Source: Airbus.
Dec. 12, 2024, © Leeham News: Airbus wants to sharply increase the production rates of its A220, A320, and A350 lines between now and 2027. This has been a goal since emerging from the COVID-19 pandemic.
However, continuing supply chain issues repeatedly moved the targets to the right. The A220 production rate goal of 14/mo was moved from 2025 to 2026. A dramatic increase in the A320 family rate to 75/mo is now set for 2027, a delay of more than a year. The new production target for the A350, 12/mo, is now 2028.
Increasing the rates is key for Airbus to meet demand and take full advantage of Boeing’s continuing disruptions as it works to emerge from its long-running safety, quality assurance, and production disruptions.
Airbus officials have been frustrated by the repeated delays in ramping up production and obtaining a reliable stream of parts deliveries from the supply chain. Annual delivery goals are challenging to meet and have fallen short of guidance. Airlines and lessors are unhappy over missed delivery dates.
But the head of Airbus’ procurement believes things are, at long last, on the right track.
Juergen Westermeier explained why in an interview with LNA last month during the Aviation Forum 2024 in Munich.
CFM gets FAA and EASA certification for a more robust LEAP-1A turbine.
By Bjorn Fehrm
December 10, 2024, © Leeham News: CFM has announced that FAA and EASA have certified an upgrade to the LEAP-1A turbine, allowing the engine to stay on wing longer, especially in hot and harsh environments.
The upgrade was developed using a new dust ingestion method CFM developed to simulate the wear on the LEAP first turbine stage and nozzle in certain dusty environments.
CFM LEAP-1A with the booster bleed ports marked with (2) and the turbine that has been improved marked with (7). Source: CFM.
How Trump tariffs affected, and could affect, Airbus, Boeing and Embraer
By Scott Hamilton
Dec. 6, 2024, © Leeham News: President-elect Donald Trump vowed to immediately impose a 25% tariff on “ALL” imports into the US from Canada and Mexico, and 10% from China.
Last week, he threatened to impose a 100% tariff on imports from the BRIC-aligned nations if they move away from the US dollar in international economics.
The BRIC nations begin with Brazil, Russia, India, and China (the “BRIC” part of the group). Egypt, Ethiopia, Iran, South Africa, Iran, and the United Arab Emirates round out the group.
There is widespread criticism of the potential damage the Trump tariffs could impose on the US economy. The targeted countries would be certain to impose tariffs on US goods.
The impact could be significant for commercial aviation—and Boeing in particular. Before its repeated self-inflicted wounds began with the 2018/19 737 MAX crisis, which continues today, Boeing was by far the largest US exporter. Deliveries of its 7-Series airplanes outside the US helped balance the trade deficit the US usually has.
Before Trump’s first term, China was the largest customer for Boeing airplanes. Deliveries accounted for 25% or more of Boeing’s annual deliveries. After
Trump took office in 2017 and imposed tariffs on China, Beijing stopped ordering Boeing airplanes. China was the first country to ground the MAX after the two fatal accidents. It was the last to recertify the airplane. And there still remains a sizeable inventory of undelivered 737s awaiting Beijing’s approval for delivery, one by one.
Trump also imposed tariffs on Airbus imports into the US as part of the two-decade-long World Trade Organization (WTO) trade dispute between Airbus and Boeing.
However, imposing tariffs is a complicated process. LNA extensively reported on the WTO battle (see related articles). We explain this further below.
Related Articles
Leeham News articles:
- Boeing files trade complaint vs Bombardier with Trump Administration 4-27-17
- Boeing C Series trade complaint is no surprise 5-1-17
- Boeing-Bombardier trade complaint revisited 7-31-17
- Decision was expected, tariff is a shocker in Boeing-Bombardier case 9-26-17
- Assessing the impact of the Bombardier tariff decision 9-27-17
- No harm to Boeing, what happened and what’s next 1-26-18
- Insignificant impact from steel tariff 3-2-18
- China tariffs on Boeing airplanes unlikely 3-14-18
- Boeing yields on C Series tariff case; what’s next for Bombardier? 3-26-24
- Trump proposes tariffs on Airbus; EU likely to retaliate 4-9-19
- EU ready to instantly retaliate if US imposes tariffs in WTO case 9/29/19
- US imposed $22m in Airbus tariffs in 2019 3/3/20
- EU tariffs on Boeing airplanes in effect 11/16/20
- US to tax fuselage, wings, tail imported for Airbus’ Mobile plant 12/31/20
Production increase delays hurt Airbus costs
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By Scott Hamilton
Dec. 2, 2024, © Leeham News: Boeing gets all the attention for late deliveries, higher costs, and bloated staff. However, Airbus isn’t immune to similar problems.
Late deliveries and missing delivery targets are well known. Supply chain issues, which Airbus and Boeing have identified, are one problem. Engines delivered late by CFM, GE, Pratt & Whitney, and late interiors from Safran and Collins (among others) are most often cited. But other suppliers down the food chain also struggle to keep up with pressure to increase production rates. Many are still coping with workforce shortages rooted in the COVID-19 pandemic recovery.
Boeing has a bloated workforce. Last month, it began laying off 10% of its 170,000 person workers.
Airbus also has a bloated workforce. However, under European labor laws, it can’t freely implement layoffs like its US rival can.
The result: productivity per employee suffers, and costs climb. A review of the Commercial division’s employee headcount provides a stark picture.
The Commercial unit had 22.7% more employees at the end of 3Q2024 vs Dec. 31, 2022, when the pandemic was widely considered to be over. It has 23.8% more employees than on Dec. 31, 2020, when the pandemic was in full swing.
Books to consider for Christmas
By Scott Hamilton
Nov. 29, 2024, © Leeham News: In America, it’s the day after Thanksgiving and this means the official start of Christmas shopping season.
Air Wars
- Air Wars, The Global Combat Between Airbus and Boeing, by…me. Sorry, I can’t help putting my
own book at the top of the list. Published in September 2021 while Boeing was still dealing with the grounded 737 MAX and the whole industry with the COVID-19 pandemic, Air Wars covers 33 years to September 2021 of the product and marketing strategies between Airbus and Boeing. There is special focus on Airbus’ super-salesman, John Leahy. But there is plenty of on-the-record input from Boeing executives like Scott Carson, Jim Albaugh and Ray Conner (all retired CEOs of Boeing Commercial Airplanes), Boeing and Airbus salesmen, and customers. The book tells the story about Boeing squandering its dominance and of mistakes by both companies. The book was rated Number 1 buys in the aviation sector by Amazon for a time, and on the recommended Buy lists of the year by the Royal Aeronautical Society and the Puget Sound (Seattle) Business Journal. Available in the US, select Europe and Asian Amazon outlets.
Flying for Peanuts
- Flying for Peanuts, by Frank Lorenzo. I also had a hand in this book, collaborating with Lorenzo on
the project for a time. But this is not why I’m recommending it. This is Lorenzo’s memoirs. He was a key player in the US airline industry for 25 years and, yes, he left the industry in 1990. Lorenzo was among the first to recognize the opportunities and the threats US deregulation of 1978 represented to the airline industry. He owned the smallest “local service” airline and faced going out of business unless he grew Texas International exponentially and rapidly. Even before deregulation became law, he persuaded the regulator to grant him the ability to adopt very low, unrestricted, system-wide fares branded Peanut Fares (hence the name of the book). Traffic and profits exploded. He sought to grow by making tender offers for other airlines. He lost some and won some and, in the process, incurred the wrath of the labor unions who understood all too well that his business model would infect the other airlines. This is a great read and history of that era, which transformed US airlines and eventually spread to the rest of the world.