Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Aerospace supply chain still ailing; Sustainable Aviation Fuel isn’t the answer to go green October 4, 2024
- Bjorn’s Corner: New engine development. Part 27. Long developments October 4, 2024
- Longshoreman strike adds to Airbus, Boeing woes October 1, 2024
- Southwest Airlines Slashing Capacity Growth Shakes Up Their Fleet Plan September 30, 2024
- Bjorn’s Corner: New engine development. Part 26. New versus old, Trent 1000 vs. XWB September 27, 2024
Calhoun’s biggest failure at Boeing: fixing safety
By Scott Hamilton
Commentary
David Calhoun
Aug. 8, 2024, © Leeham News: Kelly Ortberg becomes president and chief executive officer of The Boeing Co. today. He replaces David Calhoun, who was named to the position in January 2020. Calhoun replaced Dennis Muilenburg, with a charge to save Boeing from the first 737 MAX crisis and extended grounding; and fix, among other things, the safety culture failures that led to the 21-month grounding of Boeing’s cash cow.
Ortberg has a long list of things to fix, including but not limited to:
- The union contract with the IAM 751, in negotiations now; the contract expires in September
- Fixing Boeing’s safety culture
- Quality control at all the BCA and BDS factories
- Stemming losses at BDS
- Getting BCA production back up to normal rates (50+ for the 737, 10-12 for the 787)
- Getting the MAX 7, MAX 10, and 777X certified
- Regaining the confidence of the FAA, EASA, and other regulators; getting authority to oversee its operations and ticket airplanes back from the FAA
- Repairing the balance sheet
- Integrating Spirit AeroSystems into Boeing
- Returning BCA to profitability
- Launching a new airplane to replace the 737
- Regaining global market share closer to parity with Airbus
- Repair relations with the supply chain
- Negotiate a new contract with the engineers union, SPEEA, in 2026
- Repair relations with the airlines and lessors
- Repair relations with the IAM 751 and SPEEA unions
Ortberg’s long list of things to do reflects a failure of leadership by Calhoun.
New Boeing plea deal filed with court
By Scott Hamilton
July 25, 2024, © Leeham News: The new, second plea agreement between Boeing and the US Department of Justice (DOJ) has been filed with the US federal court in Northern Texas. Boeing agreed to plead guilty to criminal charges. The DOJ proposes a criminal penalty of $243.6m and requires Boeing to spend $455m on internal safety protocols.
The criminal penalty matches the amount in the first plea agreement of January 2021. Under the terms of that agreement, Boeing had three years to shape up, or the DOJ could pursue criminal charges. The three-year monitoring period was due to expire two days after the Jan. 5, 2024, door plug blowout of an Alaska Airlines Boeing 737-9 MAX on climb out from the Portland (OR) airport. This incident occurred at 16,000 ft. Nobody died but there were minor injuries.
The airplane was damaged throughout the cabin and into the cockpit with the sudden depressurization. Boeing bought the airplane back from the airline.
The 2021 fine and the proposed current fine have been roundly criticized as inadequate.
Boeing to plead guilty to new criminal charges related to MAX crisis
By Scott Hamilton
July 8, 2024, © Leeham News: Boeing agreed to plead guilty to new criminal charges related to the 2021 Deferred Prosecution Agreement that the US Department of Justice says the company failed to live up to.
By pleading guilty, Boeing avoids a trial. Some families of the 346 victims of two 737 MAX crashes in 2018 and 2019 already indicated they will object to this new agreement, which must be approved by a federal judge.
Boeing will pay a second fine of $243.6m, new conditions related to safety improvements (including spending at least $455m on new safety protocols) and a special overseer will be appointed to monitor Boeing’s compliance this time.
The second fine is identical to the first one in 2021. However, many—including LNA—view these fines as inadequate.
By comparison, previous DOJ Deferred Prosecution Agreements include larger fines for violations that did not include safety violations or deaths.
Aircraft production woes stretch far beyond Boeing
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By Judson Rollins
June 17, 2024, ©. Leeham News: Estimating airplane delivery rates isn’t much more than a guessing game nowadays.
While many headlines point fingers at beleaguered Boeing and Spirit AeroSystems, aviation’s production woes are much more complex. Even in 2024, the labor shortage legacy of COVID-19 and raw material shortages exacerbated by the Russia-Ukraine war loom large over the industry.
Airbus struggles to deliver airplanes on time, and engine makers also see their deliveries constrained by supply chain issues.
Source: AFP via Aviation Week Network.
Summary
- Boeing commercial production is far below advertised rates.
- Airbus deliveries suffer from shortages of seats, other parts.
- Embraer says deliveries would be higher without supply chain issues.
- COMAC’s disruption opportunity is dampened by likely trade conflict.
- Pratt and GE Aerospace slowly ramp up delivery of redesigned components.
Bjorn’s Corner: New engine development. Part 10. Airframe integration
By Bjorn Fehrm
May 24, 2024, ©. Leeham News: We do an article series about engine development. The aim is to understand why engine development now has longer timelines than airframe development and carries larger risks of product maturity problems.
To understand why engine development has become a challenging task, we need to understand engine fundamentals and the technologies used for these fundamentals.
In the last Corner, we looked at the nacelles used for a turbofan engine and for an open-rotor engine. Now, we go one step further and look at the integration of modern engines on an airliner.
Figure 1. Boeing 737NG (left) and MAX (right) nacelles compared. Source: Leeham Graphic from Boeing 737 images.
Southwest, the “legacy LCC,” part 2: Bloated labor expense, difficult fleet strategy result in uncompetitive cost structure
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By Judson Rollins
Introduction
May 20, 2024, © Leeham News: Southwest Airlines was founded on the principles of high employee productivity and low labor costs. But 53 years after beginning operations, its labor cost as a percentage of expenses — and per seat-mile — is now the highest among US airlines.
Boeing 737 MAXes parked after the 2019 MAX grounding. Source: Getty Images via AFP.
LNA studied Southwest’s and its US competitors’ 2023 annual reports to comprehensively understand their relative profitability. The resulting picture is less than flattering to the Dallas-based carrier. Southwest is increasingly a “legacy LCC,” with LCC-like unit revenue but a legacy cost structure.
Summary
- Labor costs are dramatically worse than legacy or LCC competitors.
- Fleet and route strategy are crimped by overreliance on the Boeing 737.
- Southwest’s insular management team and culture may be its greatest obstacle to business model innovation and continued profitability.
Southwest could solve its MAX 7 woes … by buying Breeze?
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By Judson Rollins
Introduction
May 6, 2024, © Leeham News: Southwest Airlines, still awaiting the certification and delivery of the Boeing 737 MAX 7 as a replacement for its aging 737-700s, might have an unorthodox alternative: acquire startup Breeze Airways for its Airbus A220 fleet – and, more importantly, its order book.
Source: Orlando International Airport via Simple Flying.
Launched in 2021 by serial airline entrepreneur David Neeleman, Breeze operates 23 A220-300s, 10 Embraer E190s, and six E195s to 47 airports across the US. It focuses on connecting larger airports to smaller cities, including a handful of transcontinental routes.
Ironically, the Utah-based airline achieved its first-ever monthly operating profit in March. It recently announced plans to operate the A220 exclusively by the end of this year.
According to a January update from database provider Cirium, Breeze has between 11 and 13 A220s scheduled for delivery each year through 2028. No options are listed.
Market intelligence says Airbus Commercial Aircraft CEO Christian Scherer visited with Southwest executives in Dallas and Breeze leadership near Salt Lake City in mid-April. This was well after Breeze’s February order for 10 additional A220s.
Summary
- To deliver or not to deliver the MAX 7?
- Southwest’s aging 737-700 fleet has few replacement options
- How a Breeze acquisition might play out
- Azorra Aviation is likely a key partner in helping Southwest get A220s
Bjorn’s Corner: New engine development. Part 3. Propulsive efficiency
By Bjorn Fehrm
April 12, 2024, ©. Leeham News: We have started an article series about engine development. The aim is to understand why engine development now dominates the new airliner development calendar time and the risks involved.
To understand why engine development has become a challenging task, we need to understand engine fundamentals and the technologies used for these fundamentals. We started last week with thrust generation, now we develop this to propulsive efficiency.
Figure 1. The base engine in our propulsive efficiency discussion, the CFM56-7 for the Boeing 737ng. Source: CFM.
When does a larger airliner pay off
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By Bjorn Fehrm
March 7, 2024, © Leeham News: Over the last decades, the choice of domestic market airliners has gone from the typical 120-seater to today 200 seats or more. We will look into what drives these decisions and where the cross-over points are from, say, an Airbus A319 to A320 and then to A321. We will limit the investigation to the Airbus range as the Boeing 737 MAX range has still not their MAX 7 and MAX 10 in service.
We will use our Airliner Performance and Cost Model (APCM) to model typical sectors and investigate what load factors favor a switch.
Summary:
- The typical domestic cabins have gone from 120 to 150 seats to now 200 seats or above.
- As airliner types grow, their trip costs increase. At what load factors can you motivate an A321 instead of an A320?
Pontifications: Boeing violated previous FAA ODA, SMS demands—Been there, done that
March 5, 2024, © Leeham News: The Federal Aviation Administration (FAA) last week gave The Boeing Co. 90 days to come up with a real program that has measurable results to fix safety and quality shortcomings.
By Scott Hamilton
The move follows the release on Feb. 26 of a year-long safety audit by a panel of 24 industry experts appointed by the FAA. More than 50 recommendations were made. Much of the focus was on failures in Boeing’s Organization Designation Authority (ODA), the Safety Management System (SMS), and pressure and fear of retaliation of employees who came forward with alerts about safety issues during aircraft production at Boeing Commercial Airplanes (BCA).
ODAs are employed by Boeing but represent the FAA. The FAA is considering establishing an independent ODA system at Boeing.
In giving Boeing 90 days to come up with a solid safety program, Administrator Mike Whitaker was blunt: “Boeing must commit to real and profound improvements. Making foundational change will require a sustained effort from Boeing’s leadership, and we are going to hold them accountable every step of the way, with mutually understood milestones and expectations.”
Boeing is the top aerospace company with the most fines and number of records, according to the website Violation Tracker. This is for all types of fines, including aviation safety, environmental, worker safety (under the USA’s OSHA), etc. Detail of Boeing’s aviation safety violations is below. Boeing’s number above includes the $2.5bn fine for the 2018-19 MAX crisis. Airbus includes a $500m settlement to the US Department of Justice for ITAR violations. Click on image to enlarge.
But Boeing and the FAA have been down this road before. Boeing and the FAA established the ODA systems ago and the SMS was created in 2019. The FAA previously fined Boeing for failing to follow through on elements of both programs.