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 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
- Digital twin is a key to JetZero’s hopes for Blended Wing Body entry June 2, 2025
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.
Spirit Airlines bankruptcy could free up scores of A320/321s
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By Scott Hamilton
Nov. 18, 2024, © Leeham News: Spirit Airlines’ bankruptcy will likely be its death knell unless a deep-pocketed savior emerges. The carrier filed a pre-packaged bankruptcy petition today, expecting to emerge in the 1Q2025. Uncertainties follow any Chapter 11 filing, however, and there is no guarantee Spirit will successfully reorganize.
Spirit Airlines A320neo. Credit: Spirit Airlines.
However, a fairly large order book for the A320neo and A321neo could help lessors that hold a large portion of these orders remarket the aircraft to viable airlines.
Spirit, an Ultra-Low-Cost Carrier (ULCC), has nearly 100 neos on order. Thirty-three are for the A320neo, and 65 are for the A321neo. All but six have delivery dates from 2026 onward, well before production begins. Airbus can deliver these aircraft to a new buyer’s specifications. Monument positions (lavs and galleys, for example) don’t have to be relocated, and interiors may be configured as a new buyer desires.
The biggest challenge will be whether interior companies can accommodate new Buyer Furnished Equipment (BFE) near-term. Safran, Collins and others are running late on some interiors as it is.
This chart shows the delivery stream for Spirit’s aircraft, as based on data from Cirium last month.
Production ramp-up goals ambitious; exceed historical trends
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By Karl Sinclair
Nov. 14, 2024, © Leeham News: Airbus (AB) and Boeing (BA), the two largest commercial aircraft makers in the world, have a combined backlog of over $1tr in orders to deliver.
Both OEMs announced plans to increase production rates in the upcoming years to satisfy demand.
Airbus issued guidance for an increase to the A320neo family delivery rate of 75/mo by 2027. It is also targeting a rate of 14/mo on the A220 program by 2026.
Boeing previously projected a return to 50/mo on the 737 MAX family by mid-2025. However, LNA is told that internally, Boeing sees 2028 as a more likely timeframe. The consulting company Accenture thinks it will be five years (ie, 4Q2025) before Boeing achieves rate 50/mo.
Boeing’s 737 production rate was 52/mo on March 9, 2019, the day before the second MAX crash. Regulators worldwide began grounding the MAX on March 10. The Federal Aviation Administration grounded the US-registered MAXes on March 13 for what turned out to be 21 months.
Just how realistic are projections by Airbus and Boeing?
Airbus looks to larger A220, insists not a threat to A320
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By Leeham News Team
Nov 4, 2024, © Leeham News: Airbus sees potential for an up-gauged A220 aircraft, but that would not pose a threat to the future viability of the A320 family, the company’s SVP for commercial aircraft marketing, Joost Van der Heijden, has said.
A220 sales have been somewhat sluggish, with the larger A220-300 variant leading in orders. In the first nine months of 2024 (to the end of September), Airbus secured an order from Air Baltic for 10 -300s, and cancellations from Nordic Aviation Capital for two of the smallest -100 variant and 10 -300s. In 2023, the A220 secured 142 orders across both variants.
Airbus A220-500. Credit: Leeham News.
Seeking to drive demand in the A220 program, Airbus is understood to be considering a stretched A220-500 model once production reaches 14 units per month, and Van der Heijden acknowledged there was “potential for family growth” beyond the current -100 and -300.
The A220-100 is a 110-seat airplane in a typical two-class configuration. The A220-300 seats 135 passengers, and the A220-500 would seat around 157, putting it in direct competition with the A320neo.
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.