Leeham News and Analysis
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Leeham News and Analysis
- 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
- Boeing eyes tariff risks April 7, 2025
- Boeing at far greater risk of tariff impacts than Airbus April 7, 2025
Uncertainty plagues airline, aerospace, lessor industries over tariffs
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By Scott Hamilton
April 10, 2025, © Leeham News, Seattle: The airline and aerospace industries are plagued by uncertainty over the global tariffs announced by US President Donald Trump on April 2. The 90-day pause on nearly all tariffs announced yesterday doesn’t resolve the uncertainties. For the moment, they are only postponed.
Airbus’s A320 production plant in Hamburg, Germany. Credit: Leeham News.
Airframe and engine manufacturers, suppliers of components feeding them, and Buyer Furnished Equipment (BFE) directly to the airlines, lessors, aftermarket maintenance companies, and freighter conversion firms have many questions and no answers in chaos following Trump’s global tariff scheme.
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Consider the unknowns:
- Will Trump tax the entire value of airplanes, engines, and components imported into the United States or just the foreign content? There is no guidance yet.
- Will other jurisdictions, notably the European Union, announce reciprocal tariffs? This is unknown because the Trump Administration hasn’t clarified what will be taxed.
- How will aircraft leased by non-US lessors be treated when US airlines are the customers? How will US lessors leasing to non-US airlines be treated? No answers.
- Contracts between lessors, airlines, Boeing, and Airbus don’t specifically address tariffs. Some airlines say they won’t pay tariffs because the contracts are silent. However, Boeing thinks there is a way to pass tariffs along. Airbus probably does, too.
- Over the last weekend, US-based supplier Howmet informed its customers it reserves the right to exercise the force majeure clause in its contracts to give it flexibility to suspend deliveries because of the tariffs. Other suppliers, including some engine companies, are following suit.
- At least one supplier has already billed some customers for delivered goods, including a tariff tax line item on the invoice.
- How will various jurisdictions treat aircraft converted into freighters with a mix of US and foreign content? There is no answer.
The US-based law firm Vedder Price issued its opinion and guidance on Tuesday on some issues.
Boeing eyes tariff risks
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By the Leeham News Team
April 7, 2025, ©. Leeham News: Escalating global trade tensions stemming from newly announced U.S. tariffs could ripple through Boeing’s intricate supply chain and potentially disrupt aircraft production, a senior executive at the company has warned.
Speaking days before President Trump imposed tariffs of 10-50% on U.S. trading partners, Malcolm An, Boeing’s senior managing director, global strategic initiatives commercial sales and marketing, said the aerospace giant was actively working to mitigate any impact, even as the full consequences remain uncertain.
Boeing 787 production line. Credit: Boeing.
“We are monitoring these things which mostly are outside of our control, and on tariffs the situation is fluid, but everyone knows that Boeing has a very complex and big global supply chain. Disruption with the key suppliers could lead to a disruption in our production system,” An warned during an address to delegates at Routes Asia 2025—an annual gathering of airport and airline leaders in the Asia-Pacific region—this year held in Perth, Australia.
“At times, outsourcing makes sense, but also at times [so does] bringing work back in house. On tariffs, in the near term, Boeing is working to mitigate the impact on the global supply chain. That’s our focus.”
The imposition of tariffs that will affect a range of Asian goods have stoked fears of a broader trade conflict between the United States and its key partners in the Asia-Pacific region—a region Boeing counts as one of its most important markets.
With more than 6,200 aircraft in backlog and a continued need to ramp up production, Boeing’s reliance on global suppliers clearly makes it vulnerable to geopolitical disruption.
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Boeing at far greater risk of tariff impacts than Airbus
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By Scott Hamilton
April 7, 2025, © Leeham News: Tariffs against the rest of the world announced by US President Donald Trump last week threaten retaliatory tariffs against Boeing at a far greater level than Airbus faces, an analysis by LNA shows.
Trump exempted no part of the world from tariffs where Boeing isn’t at risk for retaliatory tariffs. Airbus faces tariffs only in the US. Critics note that North Korea and Russia aren’t on the list; these two countries already are under steep economic sanctions. Nevertheless, the US had more than $3bn in Russian imports last year. Even Boeing’s domestic US deliveries potentially could be hit with tariffs on foreign-sourced parts, components and engines.
The situation is still fluid, and it is still unknown precisely how US tariffs will be applied to the aerospace industry. This will affect how retaliatory tariffs are applied to Boeing and Airbus, which sources much of its aircraft content (notably engines) from the US.
Accordingly, LNA’s analysis is necessarily highly preliminary. It’s also possible that more airplanes may be listed as at risk to tariffs than the final analysis would conclude.
Boeing potentially has three times more aircraft subject to retaliatory tariffs than Airbus has exposure in the US with its European and Canadian sales to US customers.
Boeing’s new fighter award moves away from money-losing fixed price contracts
By Scott Hamilton
March 24, 2025, © Leeham News: Boeing’s major win for the US Air Force’s new F-47 sixth-generation fighter isn’t just a major plus for a company under siege since 2019. It’s a major shift in its defense and space contracting that moves away from fixed price contracting, costing it billions of dollars during the past two decades.
Boeing’s new F-47 fighter. Credit: US Air Force.
An Air Force official told LNA that the contract is a cost-plus-incentive-fee award for “Engineering and Manufacturing Development. ” The contract will mature, integrate, and test all aspects of the NGAD Platform (Next Generation Air Dominance), the official said. The contract will produce a small number of test aircraft, which will be used for testing. The contract also includes competitively priced options for Low-Rate Initial Production aircraft.
Boeing’s Defense, Space, and Security unit entered into a series of fixed-price contracts that have been plagued by cost overruns. The KC-46A aerial refueling tanker cost more than $7bn over the fixed-price contract. Converting two passenger model 747-8s into the new Air Force One cost more than $3bn. The MQ-25 unmanned Navy refueling drone, T-7 Red Hawk fighter trainer, and Starliner space capsule, among other defense programs, add up to billions of dollars more cost overruns on fixed-price contracts.
The F-47 is Boeing’s first all-new fighter contract with the Air Force. Its current fighter programs pre-date the 1997 merger with McDonnell Douglas Corp.
How good is the COMAC C919?
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By Bjorn Fehrm
March 20, 2025, © Leeham News: The COMAC C919 is finding its first customers outside China, with an order from the Brunei-based GallopAir upstart being first with an order for 30 C919 in September 2023. These aircraft cannot be delivered until the Brunei regulator has approved the C919 Chinese certification, which was issued by the Chinese regulator in September 2022.
Deliveries to Chinese airliners began in December 2022, with 2023 mostly spent on route proving with China Eastern Airlines first delivered aircraft. China Eastern took delivery of a further two C919s during 2023. COMAC delivered 13 C919s in 2024 to China Eastern Airlines (8), Air China (2), and China Southern Airlines (3).
The second Air China C919 was the first C919ER version, featuring a 3,000nm nominal range, whereas the others were the standard 2,200nm version.
With deliveries now at around one aircraft per month and the start of marketing to airlines outside China, it’s time to examine the C919 more closely and compare it to the Airbus A320neo and Boeing 737 MAX.
Figure 1. The first C919 delivered to China Eastern Airlines in December 2022. Source: COMAC.
Summary:
- The C919 has now reached series delivery, with 13 aircraft delivered during 2024.
- The first sales campaigns outside China have started.
- How significant a threat will the C919 pose to Airbus and Boeing?
Boeing CFO Brian West: OK on tariffs for now, backlogs and inventories help
By Karl Sinclair
Brian West, CFO of Boeing.
March 20, 2025, © Leeham News: Boeing (BA) Executive Vice President and Chief Financial Officer (CFO) Brian West, was optimistic about Boeing’s path for recovery and appeared unworried about any near-term impacts of tariffs imposed by President Trump on aluminum and steel during an appearance yesterday at the Bank of America Global Industrials Conference.
West was optimistic that in the short-term, Boeing would face little trouble in dealing with the turmoil caused by the tariff war started by President Trump.
“On the supply side, we don’t see material impact (from the tariffs)”, said West.
According to him, the aluminum that Boeing uses is nearly all domestically sourced and makes up 1% to 2% of the average cost of an aircraft.
As well, 80% of all parts and materials used at BCA and 90% at BDS, are from domestic suppliers.
West also pointed to the large buffer in inventory, purchased pre-tariffs, which mitigates any short-term pain the company may face.
“We think we’ve got that pretty well managed”, West summed up, but concerns still exist.
“We do worry about parts availability, due to the supply chain”, he said.
While Boeing may be protected in the near-term, many suppliers in the chain do not have the financial capability to stockpile inventory and could be sourcing raw materials from tariffed nations.
There was no mention of who would be on the hook, for any price increases, in that regard.
Boeing 2024 Proxy Statement: Executive Compensation includes retirement gifts for Calhoun, Deal; housing support for Ortberg, Pope, and other stuff
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By Karl Sinclair
March 17, 2025, © Leeham News: Boeing’s top executives on average earn 81 times more money than the average company employee, the 2024 Proxy Statement reveals.
And in addition to the usual perks that top executives received, the exit packages for former corporate CEO David Calhoun and the CEO of Boeing Commercial Airplanes, Stan Deal, included unidentified retirement gifts. Deal, 61, received outplacement and unspecified transitional compensation.
Boeing filed its annual proxy statement with the Securities and Exchange Commission (SEC) on March 7, announcing the annual meeting of Boeing shareholders to be held via a virtual meeting on April 24.
In the SEC filing, Boeing detailed the compensation paid to executive officers during 2024.
(BCA: Boeing Commercial Aircraft, BDS: Boeing Defense, Space & Security, BGS: Boeing Global Services). Source: Boeing.
In 2024, more than $69m was spent compensating executives, with $55.4m paid in stock awards and options.
NASA hit by DOGE layoffs, office closures; Boeing’s X-66A R&D continues for now
By Scott Hamilton
March 11, 2025, © Leeham News: The National Aeronautics and Space Administration (NASA) is the latest federal government agency to come into Elon Musk’s sights for major cost cutting, and a union representing about 1,000 probationary employees is worried about the impact that massive layoffs on the agency might have on aerospace research and development.
Musk is a special representative of President Donald Trump. He heads the Department of Government Efficiency (DOGE), which has wreaked havoc throughout federal government departments, slashing jobs and programs. NASA (which contracts with Musk’s SpaceX and Boeing, a Musk competitor) announced that it is cutting the Office of Technology, Policy, and Strategy, the Office of the Chief Scientist, and the Diversity, Equity, Inclusion, and Accessibility branch in the Office of Diversity and Equal Opportunity.
NASA provides funding and research support to Boeing and other aerospace companies in the commercial aviation, defense, and space sectors. Airbus, Boeing’s prime competitor, has also benefited from NASA research.
Currently, Boeing’s highest-profile projects with NASA are its SLS space booster, the Starliner crew capsule, and the X-66A Transonic Trussed Brace Wing (TTBW) research project for a new commercial airliner.
The SLS and Starliner projects are years behind schedule, billions of dollars over budget and fraught with technical problems. SpaceX competes with both space projects. Boeing previously warned that about 400 employees associated with the SLS could lose their jobs if NASA cancels this program.
Boeing is proceeding with the X-66A research, the company says. Whether NASA continues its funding remains to be seen.
Boeing faces three labor contracts expiring this year
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By Scott Hamilton
March 10, 2025, © Leeham News: Boeing endured a costly 53-day strike last fall by its largest and most powerful union, the IAM 751. The November settlement provided a 43% wage hike, added benefits to its 401(k) retirement program for employees, cash bonuses, and a commitment to assemble the next new airplane in the greater Seattle area.
The strike cost Boeing around $10bn in lost revenue and other costs. Boeing nearly exhausted its entire cash reserve, which had been depleted after years of crises. Only by raising $25bn in the equity and debt markets did Boeing avoid draining its bank accounts.
However, settling the strike doesn’t mean its labor issues are over. Three more contracts expire this year, including one with a different IAM district.
The next contract expiring this year is with a Teamsters local in Puget Sound (Seattle). It expires next month.
Here is the lineup of expiring contracts:
- April 2025: Boeing drivers (Teamsters Local 174) in Puget Sound. They haul wing components from Auburn and Frederickson north to Renton and Everett. A strike there would seriously impact Boeing production.
- July 2025: IAM 837 assembly workers in St. Louis. (Building T-7s, F-15s and F-18s.)
- October 2025: Boeing welders in Puget Sound. Small group — a few hundred — represented by the International Union of Operating Engineers Local 302. There’s a pretty serious shortage of welders both nationwide and regionally, so they have more leverage than their numbers would indicate. Needed more for plant operations than for production.
- January 2026: SPEEA Wichita Technical and Professional Unit. About 1,600 people are now working for Spirit.
- October 2026: SPEEA Northwest Professional Unit and Technical Unit. Two separate but connected bargaining agreements currently cover slightly more than 17,000 workers in Washington, Oregon, California and Utah.
Boeing and Airbus: A financial comparison
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By Karl Sinclair
March 3, 2025, © Leeham News: “It was the best of times, it was the worst of times,” famously wrote Charles Dickens in the opening of A Tale of Two Cities.
Boeing 737 MAX. Credit: Boeing.
Indeed, the financial results may indicate that neither Airbus (AB) nor Boeing (BA) are going through the best of times. However, one corporation clearly weathered 2024 better than the other.
While Airbus (with Helicopters, and Defense and Space) and Boeing (with Defense and Space, and Global Services) have other business segments, make no mistake: these are the undercards that make up the heavyweight title fight.
Airbus and Boeing will both go as their respective commercial aircraft divisions do.
Airbus A320neo. Credit: Airbus.
Both OEMs have released 20-year commercial aircraft market projections, forecasting that more than 40,000 new aircraft are needed, worth trillions of euros and dollars. This is the huge prize Airbus and Boeing are grappling with.
Summary
- About 10 years for Boeing’s financial recovery.
- Boeing could deliver its entire backlog, and its debt will still be greater than pre-crisis levels.
- A400M continues to be a drag on Airbus financials.
- Spirit AeroSystems will add to Boeing’s debt.