Leeham News and Analysis
There's more to real news than a news release.
HOTR: Moving up the 777-8F?
By the Leeham News Staff
June 4, 2020, © Leeham News: A lawsuit filed by cargo specialist Volga Dnepr against Boeing claims Boeing is running out the clock on the 747-8F.
The report by The Seattle Times makes for interesting reading. Key of HOTR is the reference that Boeing plans to end 747 production within three
years. This is longer than LNA believes. Regardless, the three-year timeline fits with information LNA about the 777-8F.
LNA is told Boeing sales floated the possibility of launching the 777-8F around 2023-24. This would bring forward the launch by about two years from plans when the X program was launched in 2013.
Then, the entry into service for the 777-9 was targeted for 2019-2020. This was to be followed by the 777-8 passenger model in two years and then the 8F two years after that.
During the fallout of the MAX grounding, the 777-8 was deferred indefinitely. Now, with COVID upending demand, customers are deferring and talking about canceling 777X orders. Boeing is reducing 777 production from five to three per month. The 777-9 production will go to one per month.
The 777 Classic line is sustained by the 777-200LRF. The 777-8F concept is a couple of frames longer than the -8P but shorter than the 777-9.
Having spent more than $1bn for the advanced Composite Wing Center to build 777X wings and having produced about a dozen 777-9s so far, Boeing needs to boost the X sales prospects.
Bringing forward the -8F is the way to do so.
Pontifications: New GE Aviation CEO will face big challenges
By Scott Hamilton
June 1, 2020, © Leeham News: The new chief executive officer for GE Aviation (GEA) will face huge challenges when he or she succeeds David Joyce when he retires this year, say industry sources. Joyce was named CEO in 2008.
Like other sectors of commercial aviation, the COVID-19 crisis hit GEA hard.
Initially, the workforce was cut by 10% in March. This was deepened to 25% in May. Non-essential spending was cut. A hiring freeze was implemented and other cost-cutting measures were put in place.
Summary
- Demand for new airplanes tanked. The Boeing 737 MAX, powered by CFM LEAP engines, has been grounded since March 2019. No return to service is in sight. (GE is a 50% partner in CFM International, which makes the LEAP.)
- LEAP engines on the 737 and the competing Airbus A320neo family fall way short of on-wing targets. Shop visits, under warranty, add to GE’s cost basis.
- The Boeing 777-9, powered by the GE9X, is already a year late. A redesign of some critical parts of the engine was required.
- COVID also decimates the engine aftermarket business, which is core to the OEM business model.
Pontifications: There is no good news
May 18, 2020, © Leeham News: There simply is no good news in commercial aviation right now.
By Scott Hamilton
Yes, airport traffic is upticking in the USA (and elsewhere) slightly. But in the USA, it’s still less than 10% of last year’s totals.
There remains a tremendous amount of uncertainty.
- Airbus plans to lay off some 10,000 employees, according to press reports. Another production rate cut seems inevitable.
- Boeing’s CEO revised the forecast for air traffic recovery from 2-3 years to 3-5 years. Production recovery will take another 2-3 years after that, he said.
- Embraer’s biggest customer for the E195-E2, Azul Airlines, deferred deliveries from 2020-2023 to 2024. There haven’t been announcements about deferrals by US carriers for E175-E1s, but there is no reason to believe these won’t be deferred.
- Delta Air Lines says 7,000 of its 14,000 pilots will be surplus to its needs this fall.
- Spirit Aerosystems laid off about 1,700 employees due to Boeing’s production planning.
- Qatar Airways will retire 50 airplanes, defer new orders from Airbus and Boeing and cut the workforce by 20%.
The list goes on and on and on.
Analysis: Mitsubishi suspends development of M100, continues M90 due to COVID
By Scott Hamilton
Analysis
May 12, 2020, © Leeham News: Mitsubishi Heavy Industries (MHI) yesterday said it cut development money for the M100 SpaceJet. M100 R&D is suspended indefinitely while it continues for the M90 on half rations.
MHI will continue certification of the M90.
MHI also said it will reevaluate demand for the M100 because of COVID-19 impacts.
This immediately raised questions whether MHI may kill the M100 program.
To do so will squander MHI’s once-in-a-lifetime chance to become a real global power in commercial aviation. If this happens, “Japan Inc.” also loses a chance to be part of this.
Pontifications: Boeing focuses on design, production vs airplane development–for now
By Scott Hamilton
By Scott Hamilton
May 11, 2020, © Leeham News: Boeing killed development of its alphabet soup of airplane concepts for now.
“For now” is a relative term. When Boeing will be ready to show concepts to customers as a prelude to a program launch depends on how quickly the industry recovers from the COVID crisis.
But research and development of a streamlined production system, once key to new airplane projects, continues.
CEO David Calhoun said on the 1Q2020 earnings call that the New Midmarket Airplane (NMA) is essentially dead. He said in the following media call that the “differentiators” for the next new airplane from Boeing or Airbus will be manufacturing and engineering.
Supply chain focus: Safran’ s first 2020 quarter
By Bjorn Fehrm
May 5, 2020, ©. Leeham News: Next out in our COVID19 supply chain focus is Safran Group.
Safran, together with GE Aviation, is the largest supplier of turbofan engines to the World’s airliners. Their success in the CFM joint venture is unprecedented. The first joint engine, the CFM56 has passed 30,000 deliveries, and the follow-up, the CFM LEAP, has 16,000 orders.
At the back of this successful business, Safran has expanded to a major aeronautical supplier for propulsion, systems, and cabins.
Seattle Times, reporting team win Pulitzer Prize for Boeing 737 MAX coverage
May 5, 2020, © Leeham News: The Seattle Times and its reporting team won a Pulitzer Prize, it was announced yesterday, for its coverage of the Boeing 737 MAX crisis.
The team is Dominic Gates, Steve Miletich, Mike Baker and Lewis Kamb.
Boeing sees air traffic recovering in 2-3 years; production will take longer
By Scott Hamilton
April 27, 2020, © Leeham News: Passenger traffic should recover to 2019 pre-COVID-19 levels in two to three years. But resuming production at pre-COVID rates will take longer.
Boeing also needs to borrow more money in the next six months to get through the crisis.
These were among the announcements at the Boeing annual shareholders meeting today at which all 12 management-support directors were elected or reelected to the Board of Directors.
Pontifications: Taking a knife to a gunfight
April 27, 2020, © Leeham News: There is a great line in the movie, The Untouchables. Sean Connery’s character tells an assassin that he’s bringing a knife to a gunfight.
By Scott Hamilton
That’s what came to mind when Embraer says it will seek remedies against Boeing following the latter’s terminating the joint venture agreement between the two companies.
In the movie, the assassin lured Connery into a trap. Connery was gunned down by a machine gun. But don’t expect Boeing to be lured into any trap by Embraer.
Boeing doesn’t pull a move like this without thinking through all the possibilities. It may muff the thought process, as will be noted below, but it does think through alternatives.
Analysis: The collapse of the Boeing-Embraer joint venture
By the Leeham News Team
Analysis
April 25, 2020, © Leeham News: The Boeing-Embraer joint venture is off.
Boeing called off the JV, saying Embraer didn’t satisfy all the conditions required.
The Boeing-Embraer joint venture is dead.
The impact to Embraer is more profound than to Boeing.
When the JV was announced in 2019, the advantages for Boeing were:
- Access to EMB engineers at a time when Boeing’s are aging and ready to retire.
- Access to much lower cost base in Brazil.
- KC-390 program.
- Revenue from EMB Commercial services.
- E2 program, though this is tangential.
The advantages for Embraer were:
- Access to Boeing’s vast customer base, marketing power, balance sheet (again, pre-virus) and capital markets.
- Access to work on new airplane programs: NMA (at the time), Future Small Airplanes (single aisle, either to compete with A220 or larger).
- Work for its engineers.
- A future beyond the struggling E2 and beyond the fanciful turboprop concept.
- A future for Embraer Commercial Airplanes, which in LNA’s view was increasingly risky.