By Bryan Corliss
Jan. 27, 2023, © Leeham News: Composites materials supplier Hexcel Corp. reported that its fourth-quarter sales were up 29% over the same period last year, driven by increased demand from all across the aerospace industry.
As international air travel recovers, airlines are seeking more widebody jets, which is good for Hexcel, because newer widebodies have higher percentages of composite materials, Hexcel executives told investment analysts. However, new business jet and military aircraft models also incorporate higher percentages of composites.
Stanage and Hexcel CFO Patrick Winterlich noted that their company is not immune from the inflation and labor issues facing most manufacturers, but said they’re coping.
“You can’t give someone five years, three years, of experience in six months or nine months,” Stanage said. “We are working as hard and are focused as hard as we can on training and accelerating it.”
By Bryan Corliss
Jan. 24, 2023, © Leeham News – Aerospace suppliers GE and Raytheon both reported fourth-quarter sales surges, as the commercial aviation industry continued its recovery from the worst of the Covid pandemic.
Both companies also project strong sales growth in 2023, but warned investors that there are lingering supply chain issues and labor shortages that could hold them back.
“While we are broadly beginning to see our supply chain improve, it is not yet at the levels we need,” Raytheon CFO Chris Calio told stock analysts during the company’s fourth-quarter earnings call on Tuesday. “We are assuming a recovery as we move into the back half of the year.”
By Scott Hamilton
Dec. 27, 2022, © Leeham News: The US National Transportation Safety Board (NTSB) today issued a critique of the newly released final investigation report of the Ethiopian government of the March 10, 2019, crash of a Boeing 737 MAX.
Ethiopian Airlines flight ET302 came five months after Lion Air flight JT610, a MAX, crashed. Both accidents began when the Maneuvering Characteristics Augmentation System (MCAS) activated following a failure of the single Angle of Attack (AOA) sensor to which it was tied malfunctioned (JT610) or failed (ET302).
Boeing issued a notice to MAX operators after the Lion Air crash outlining proper procedures pilots should follow in case MCAS erroneously activated again. The Ethiopian government investigation placed the blame for the crash on Boeing. The NTSB’s critique concluded the pilots failed to follow Boeing recommendations and should be partly held responsible for the probable cause of the crash. Had they followed procedure, the NTSB concludes the pilots could have successfully flown through the emergency.
Nov. 21, 2022, © Leeham News: When Boeing CEO David Calhoun told his audience at the Nov. 2 investors day (and all those watching on the web) that there will be no new airplane introduced until the middle of the next decade, it was a shocker to some.
Wall Street analysts and investors loved the news. There would be no spike in research and development spending. Free Cash Flow—which is seemingly all that matters to analysts—was forecast to be $10bn by 2025-2026. Returning money to shareholders seemed to be restored as Boeing’s No. 1 priority. The stock price went up 18% in the week after the news.
Calhoun said there would not be a new engine before the middle of the next decade that would support the development of a new airplane. Calhoun ignored advances in airplane/wing design as a contributor to reducing fuel burn, however.
But, as the late radio commentator Paul Harvey used to say, “now, for the rest of the story.”
Since the Nov. 2 investors day, the first since 2018, LNA quickly learned that there was more than expressed at the investors day event.
In the meantime, Calhoun purchased 25,000 shares of stock on Nov. 8 for approximately $3.87m. Insider purchases like this typically send a message to Wall Street and stockholders that the CEO (or whomever) has confidence in the company’s future.
By Bryan Corliss
Nov. 3, 2022, (c) Leeham News: Spirit AeroSystems said today its third quarter revenues grew by 30% year-over-year, driven by an increase in deliveries for Boeing’s 737 MAX program.
The company posted positive operating income of $4.5 million for the quarter – its first positive income since 2019 – but reported an overall net loss it said was due mainly to charges connected with the cost of terminating an employee pension plan.
Spirit said it delivered 69 Boeing 737 shipsets during the third quarter — 23 a month — compared to 47 shipsets in third quarter 2021.
Boeing deliveries are expected to be stable at 31 a month for the foreseeable future, Spirit President and CEO Tom Gentile said.
“Given that our production rate is set at 31 aircraft a month on the 737 program now, and we will likely remain at that rate for much of 2023, we are initiating a focused effort to reduce structural costs to enhance our profitability and cash flow in 2023,” Gentile said in the company’s earnings release.
The company faces challenges, however. “We continue to see disruptions in our factories due to part shortages, increased levels of employee attrition and volatile schedules,” Gentile said.
Spirit, which had reduced its quarterly dividend to 1 cent a share in 2020, said it will suspend dividend payments entirely starting in the fourth quarter, “due to the current challenging macroeconomic environment.”
By Bryan Corliss
Oct. 26, 2022, (c) Leeham News: The Boeing Co. posted a loss from operations of nearly $2.8 billion for the third quarter, citing losses on fixed-price defense development programs that offset an overall 4% growth in revenues.
The consensus of Wall Street analysts earlier this week was that Boeing would announce profits of 13 cents a share and would break a streak of four consecutive losing quarters. Instead, Boeing posted a loss of $5.49 a share.
However, in a conference call with stock analysts later in the morning, Calhoun was upbeat, emphasizing Boeing’s positive operating cash flow of nearly $3.2 billion for the quarter.
“This quarter was a big one for us,” he said. “We hit a marker … to generate positive cash flow.”
Boeing booked losses of roughly $1.95 billion on two defense programs, CFO Brian West said: KC-46 tankers and new Air Force One presidential transports. Both are fixed-price contracts for commercial jet conversions that forced Boeing to eat any cost overruns.
“We aren’t embarrassed by them,” Calhoun said. “They are what they are.”
But in an interview with CNBC’s Phillip LeBeau Wednesday, Calhoun said Boeing will not do fixed-price defense contracts in the future. “That is not our intent.”
By Bryan Corliss
Oct. 17, 2022 © Leeham News: After sustaining major losses in their most-recent fiscal years, India’s airlines will recover in 2022. But rising fuel and labor costs, plus weak prospects for financing will constrain near-term growth.
That’s the analysis of Aairavat Transport & Technology Ventures consulting firm.
AT-TV’s assessment is less bullish than Boeing’s market outlook, which projects Indian airlines to add 25% capacity over the next year, with long-term growth targeted for 7%. Airbus is slightly more cautious, projecting 6.2% annual growth over the next two decades.
India is one of the world’s largest aviation markets. It’s also been one of the most challenging, with bankruptcies and constant financial distress plaguing the industry.
By Bjorn Fehrm
October 13, 2022, © Leeham News: In our series, we look at the development of the latest single-aisle engines. Should these be geared? What do you gain and risk with a geared design? Is this a new development, or has it been around for a long time?
We examine the development of single-aisle engines since 2000, their fuel efficiency, and operational reliability.
By Scott Hamilton
Sept. 15, 2022, © Leeham News: The indefinite delay in China authorizing Boeing to deliver 737 MAXes to airlines led Boeing to slowly remarket more than that are 100 stored.
CEO David Calhoun said today that Boeing can no longer wait for China’s OK with the large inventory of aircraft that went into storage when the MAX was grounded in March 2019. Boeing continued building the MAX on the assumption that the grounding would be a short one. When by the end of 2019, there was no end in sight for recertification, production was halted with 450 MAXes built but stored. About 140 of these were destined for Chinese airlines and lessors. Lessors have been allowed to accept some deliveries as long as the airplanes were delivered to customers outside China, LNA previously reported.
By Scott Hamilton
Aug. 15, 2022, © Leeham News: Boeing CEO David Calhoun says the company won’t build 737 gliders. That’s what airplanes are called as they exit final assembly without engines. The mitigation ironically comes from a circumstance that bedeviled Boeing since March 2019.
Planning is underway to take engines from the large inventory of stored 737 MAX aircraft to install on new production airplanes, LNA confirmed.
Boeing is producing 20-30 ship sets of counterweights, LNA is told. The counterweights are yellow blocks hung from the pylons to which engines are attached. The weights are needed to prevent the airplanes from sitting on their tails without the heavy engines installed. The counterweights will be installed on the stored airplanes when the CFM LEAP-1B engines are removed to install on new production aircraft as they roll off the final assembly line in Renton (WA).
In 2018, some MAXes rolled off the final assembly line without engines when CFM deliveries couldn’t match the production rate then.
Airbus has upward of 30 A320 gliders because CFM and Pratt & Whitney can’t deliver engines on time due to supply chain issues. Boeing, struggling to return to the 2019 737 production rate of 52/mo following the 21-month grounding of the MAX and a slow recovery from the COVID pandemic, hasn’t produced gliders yet. CFM is the exclusive engine supplier for the MAX.