Leeham News and Analysis
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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 9 month 2024 results: Inventory build-up for Q4 and Space Business lowers results
By Bjorn Fehrm
October 30, 2024, © Leeham News: Airbus has presented its results for the first nine months of 2024. The operational result (EBIT Adjusted) is €0.8bn lower than in 9M2023, caused by an inventory increase of €7bn for Airbus Commercial compared with 9M2023 and a write-off of €1bn in the Airbus Space business during the first nine months.
Apart from these areas, group performance was as expected, with 495 commercial aircraft delivered, increasing Commercial revenues by 4% compared with 9M2023, Helicopter revenues by 5%, and Space and Defense revenues by 30%, mainly from the Air Power business.
Airbus announced a 9M2024 profit of 1,808m€ (2,332m€) on revenue of 44.5bn€ (42.6bn€).
Boeing strike hits suppliers, Airbus steps in
- Strike creates gap for suppliers.
- Airbus places accelerated orders at some affected suppliers.
- Snapping up capacity may complicate Boeing’s post-strike recovery.
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By Scott Hamilton
Oct. 10, 2024, © Leeham News: There is no end in sight for the strike by the International Association of Machines and Aerospace Workers, District 751, ending its fourth week today.
The strike costs Boeing between $50m and $150m a day, depending on whose estimate you believe. (The world will have an understanding of the cost on Oct. 23, when Boeing reports its third-quarter financial results.)
A strike by the IAM 751 in 2008 lasted 57 days. Boeing lost an estimated $6bn in sales during this period and racked up more than $2bn in lost cash flow. It took Boeing about two years to fully recover from the strike. Then, Boeing didn’t have the overhang that it has today from five years of crises and an irate Federal Aviation Administration that oversees and restricts Boeing’s production.
But recovery, whenever it begins, has a new wrinkle that didn’t exist in 2008. Then, it was Airbus that was in disarray. Its A380 program was in shambles due to production issues. The fledging A350, Airbus’ answer to the Boeing 787, was being redesigned and tweaked for the fourth or fifth time due to poor market reception. The A400M program was an operational and financial disaster.
Today, Airbus is playing from a position of strength and dominance. Boeing is playing from a position of weakness and financial trauma.
Strike slows Boeing’s march toward improving safety culture
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By Scott Hamilton
Credit: Federal Aviation Administration.
Oct. 7, 2024, © Leeham News: With the strike at Boeing by the International Association of Machinists and Aerospace Workers District 751 nearing its fourth week, progress in improving the safety culture is one of the areas that has slowed.
Boeing initiated a company-wide furlough to stem cash outflow during the strike. Among those laid off were people in the Chief Aerospace Safety Office, The Seattle Times reported on Sept. 19.
“[O]ne particular set of nonunion employees were surprised to learn they will be among those subject to the rolling furloughs,” the newspaper reported.
“That’s those in Boeing’s Chief Aerospace Safety Office — responsible for the company’s implementation of Congressional legislation that raised safety standards and setting up a new companywide safety management system.”
The Safety Office was created in 2021 in the fallout from the 2018-19 737 MAX crisis and continuing revelations of shortcomings in safety protocols and quality assurances on assembly lines in Washington State and South Carolina. It’s headed by Mike Delaney, a career Boeing employee.
The Federal Aviation Administration (FAA) has come down hard on Boeing to improve its safety culture and quality control.
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The IAM 751 and Boeing in 2019 proposed a safety reporting program called ASAP, which stands for Aviation Safety Action Program. It took three years of negotiations before it was adopted. Two years later, union president Jon Holden said implementation was still in its early stages.
Boeing’s engineer and technicians union, SPEEA, early this year proposed a similar ASAP program, But in April, the union claimed it and Boeing was at an impasse over how the program would work. Negotiations between SPEEA and the company were held by Boeing’s labor relations department, not the Safety Office.
Boeing’s labor negotiators now have the strike to contend with. With the Safety Office employees subject to rolling furloughs, progress on improving the company’s safety culture has slowed. SPEEA’s lead negotiator is now occupied with contract talks at Spirit AeroSystems, a major Boeing supplier. SPEEA also represents the engineers and technicians there.
Rival Airbus has its safety protocols from which Boeing might benefit as an example to follow.
Longshoreman strike adds to Airbus, Boeing woes
Update, Oct. 3: The Longshoreman’s union and the employers agreed to a 62% pay hike over six years. The strike has been called off.
By Scott Hamilton
Oct. 1, 2024, © Leeham News: As if the aviation industry supply chain isn’t causing enough heartburn to Airbus and Boeing, a new US dockworkers strike today will interrupt shipping to Charleston (SC) and Mobile (AL).
Charleston is where Boeing assembles the 787. Mobile is where Airbus assembles the A320/321. It’s also where there is an assembly line for the A220.
“We are aware of the situation and have taken actions to mitigate the potential impact on our operations in Mobile,” an Airbus spokeswoman said, without providing details. Fuselage sections and wings for the A320s are shipped to Mobile. It’s unclear whether any sub-systems for the A220 are affected; most components are trucked in, but not all.
Boeing’s 787 line largely relies on airlifted components via Boeing’s in-house Dreamlifter program. But some components are shipped. The 787 line currently is the only assembly facility remaining open during a separate contract dispute strike by the International Association of Machinists and Aerospace Workers. This strike, now in its third week, shut down all Boeing aircraft assembly in the greater Seattle area. Boeing doesn’t “currently” expect and impact.
Bjorn’s Corner: New engine development. Part 26. New versus old, Trent 1000 vs. XWB
By Bjorn Fehrm
September 27, 2024, ©. Leeham News: We do an article series about engine development and why it has longer timelines than airframe development. It also carries larger risks of product maturity problems when it enters service than the airframe of an airliner.
In our look at examples of recent developments with problems and these put in a historical perspective, looking at the reliability and durability of its predecessor we compare the Rolls-Royce Trent 1000 for the Boeing 787 to the Trent XWB for the Airbus A350.
Figure 1. The Rolls-Royce Trent 1000 with its wide cord hollow titanium fan. Source: Rolls-Royce.
The A330neo for medium haul or twice the frequency with A321XLR? Part 3
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By Bjorn Fehrm
September 19, 2024, © Leeham News: We examine the high-volume short-to-medium-range market and check whether a route previously reserved for the Airbus A330 can be flown with a fleet of A321XLRs. At equal per-passenger operational costs, doubling the frequency is advantageous and can drive market growth, revenue, and margin.
After comparing passenger only operating costs, such as per seat mile Cash Operating Costs (COC), we add cargo to the mix. To compare efficiency, we then need to do a route margin comparison.
Summary:
- When we add cargo to the revenue mix, the A321XLR’s limited cargo capability makes it a less attractive alternative for routes with cargo traffic.
- The A321XLR is still an interesting alternative for routes with few cargo opportunities and where route frequency can motivate higher passenger yields.
Bjorn’s Corner: New engine development. Part 24. New versus old, GTF versus V2500
By Bjorn Fehrm
September 13, 2024, ©. Leeham News: We do an article series about engine development and why it has longer timelines than airframe development. It also carries larger risks of product maturity problems when it enters service than the airframe of an airliner.
We have covered the engine’s different parts and their technology challenges. We now look at some examples of recent developments with problems and put them in a historical perspective.
The A330neo for medium haul or twice the frequency with A321XLR? Part 2
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By Bjorn Fehrm
September 12, 2024, © Leeham News: We examine the high-volume short-to-medium-range market and check whether a route previously reserved for the Airbus A330neo can be flown with a fleet of A321XLRs. At equal per-passenger operational costs, doubling the frequency is advantageous and can drive market growth, revenue, and margin.
After comparing the aircraft and their seating, we now use our Airliner Performance and Cost Model (APCM) to fly them on a Southeast Asia route and compare the operating costs.
Summary:
- The A321XLR is competitive on fuel costs but loses out on Cash costs as several cost factors don’t scale linearly with passenger capacity.
- The cost disadvantage doesn’t render the A321XLR a non-replacement for an A330-900; it just needs a positive revenue uptick from the frequency increase to be an interesting alternative.
A320neo replacements needs to be ~25% more efficient
By Scott Hamilton
Sept. 11, 2024, © Leeham News: The replacement for the Airbus A320neo family should be 25% more efficient, says CEO Guillaume Faury.
“The priority for the next generation of single line, the one that will replace the very successful A320 family, will be to reduce the fuel burn by around 25%,” he said. Further reduction in carbon emissions has to come from the use of decarbonized fuel. This is primarily sustainable aviation fuel. “This is something we’re going to achieve working on the propulsion system,” he said.
Faury made his remarks during the annual US Chamber of Commerce Aviation Summit in Washington (DC).
Faury said that the CFM RISE Open Fan engine appears, so far, to be the best hope for a new engine. “It’s been very interesting to see the RISE engine as a successor of the LEAP to continue to improve fuel efficiency. Part will come from the propulsion system, as usual, and a large part will come as well from the plane itself.”
Slow production ramp up, international sanctions slow C919 progress
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By Karl Sinclair
Sept. 9, 2024, © Leeham News: China isn’t getting into the commercial aviation industry to let Airbus and Boeing supply three quarters of the market, says a consultant. The long-term outlook for the Big Two aircraft producers may be considerably more bearish than many think.
He made the following comments when asked about the new Boeing (BA) projections for the aircraft market in China, “COMAC wants to hit 150 (deliveries) in the next five years. That means that one-fourth of that China demand goes to COMAC,” said Brian Langenberg, principal and industrial strategist of Langenberg and Co. “If you believe that China got into the commercial aviation industry to let Boeing and Airbus make three-fourths of their narrow bodies aircraft,” he says people underestimate the determination of the Chinese government.
COMAC C919. Source: Leeham News.
The C919 is COMAC’s latest narrow-body jet, which began commercial service at China Eastern Airlines (CEA) in 2023. Since then, eight more have been delivered to CEA, Air China, and China Southern as COMAC slowly ramps up production. COMAC has more than 1,000 orders for the type, with the vast majority coming from airlines and lessors in China, although AerCap of Ireland has orders for 20.
COMAC’s production goals are aggressive. LNA believes the learning curve will take longer than production managers suggest. International certification by European and US regulators is also important to China and mandatory for export sales.
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China still needs Boeing to fill demand