Boeing needs 737 replacement launch by 2026 if not sooner

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By Scott Hamilton

Introduction

Nov. 9, 2020, © Leeham News: Boeing needs hundreds of new orders for the 737 MAX and/or a new replacement program launch by 2026, if not sooner.

An analysis shows that 737 deliveries tank by 2028.

This isn’t just about the 737-10 and 737-9, which don’t fare well against the Airbus A321neo. The shrinking backlog is the problem.

Ryanair’s CEO, Michael O’Leary, said last week Boeing will delay delivery/entry into service of the 737-10 MAX by up to two years.

This largely stated the obvious.

The first 10 MAX rolled out of the factory Nov. 22 last year. It could not enter flight testing because the MAX family was grounded March 13. The MAX remains grounded. Recertification may come this month, but it appears more likely next month.

Boeing 737-10. Source: Boeing.

This delays the start of flight testing until probably January. This is a 14-month delay.

Flight testing will take a year to 15 months, or to January to March 2022—about two years after the planned EIS. Boeing’s production ramp up will further impact delivery of the 10 MAX.

Although some recent new focus was on the 10 MAX, the larger issue is the entire 737 family.

Summary
  • Production ramp up will be slow.
  • Inventory will take two years to clear.
  • Airline demand is poor the next 2-3 years.
  • Boeing’s breadwinner sees major delivery drop from 2026.
  • A further drop by 2028 demonstrates need for a 737 replacement—not just an A321 competitor.

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Pontifications: Certification timing may push EIS for 777X

Nov. 2, 2020, © Leeham News: Throughout the 737 MAX investigations and recertification process, former Boeing CEO Dennis Muilenburg said there would be no delay on 777X certification.

By Scott Hamilton

On Boeing’s earnings call last week, Muilenburg’s successor, David Calhoun, said there could be.

“On the 777X, we continue to work with the regulators on certification work scope, including reflecting the learnings from the 737 cert process,” Calhoun said. “As with any development program, there are inherent risks that can affect schedule. And while we continue to drive toward entry into service in 2022, this timing will ultimately be influenced by certification requirements defined by the regulators.”

Boeing is certifying the 777X under the Changed Product Rule, the same process used for the MAX. Certification is being pursued as a derivative of the 777, a point of scrutiny on the MAX.

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Pontifications: Earnings previews Airbus, Boeing; Watching Mitsubishi

By Scott Hamilton

Oct. 26, 2020, © Leeham News: It’s earnings call week for Boeing and Airbus.

And Mitsubishi Heavy Industries is said to plan an announcement “freezing” development of the SpaceJet.

Let’s preview these events.

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Lessors to Take Growing Share of Fleeting the Future

By Kathryn B. Creedy

Air Lease Executive Chair Steven Udvar Hazy expects lessors to play a larger role in aircraft fleeting in the future, according to comments made during yesterday’s Aviation Week Fireside Chat with the lessor.

“I don’t see lessors going below 40%,” he told Air Transport World Editor Karen Walker. “I see it creeping up to perhaps 50% or 55% and that includes operating leases and various other exotic mechanisms.”

Udvar Hazy pointed to the poor financial shape of the world’s airlines which have used all their current levers to increase liquidity to ride out the Covid 19 crisis.

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Alaska Airlines may keep leased Airbus fleet

By Olivier Bonnassies

Airfinance Journal

Oct. 9, 2020, (c) Airfinance Journal: Alaska Airlines is believed to be working on a solution regarding its narrowbody fleet composition after initial talks failed with lessors regarding an early phase-out of Airbus A320-family aircraft.The US carrier approached leasing companies in the summer with a large request for proposals (RFP) to replace its entire leased current-generation A320-family fleet with Boeing 737-800, -900ER, Max 8 and Max 9 models over the next few years.

Alaska Airlines may keep a mixed fleet of Airbus A320s and 737s at least through 2025. Lessors are balking at early returns. Photo: Alaska Airlines.

According to Airfinance Journal‘s Fleet Tracker, Alaska has 10 A319s with leases expiring between 2021 and 2023. Another 41 A320s have leases expiring between 2020 and 2025.

But the objective of the RFP is to accelerate the exit of the carrier’s 51 A320-family aircraft ahead of lease expirations as well as sell 10 owned A320s that were manufactured in 2015 and 2016.

But leasing sources talking to Airfinance Journal say the approach was not “well received”.

“They may keep those aircraft to scheduled redelivery dates,” says one lessor.

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With 787 FAL closing and 747 production ending, what does Boeing do with massive space in Everett?

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By Scott Hamilton and Bryan Corliss

Introduction

Oct. 1, 2020, © Leeham News: Boeing is expected to announce as early as today that it will consolidate the 787 final assembly lines into one at its Charleston (SC) plant.

Footprint of Boeing Everett final assembly building. This map is somewhat outdated but a current one is not available. Source: Seattle Times.

Reuters reported last week the decision to consolidate production in Charleston was made. The Wall Street Journal Tuesday night also reported this decision, saying the decision could be announced this week.

The Everett (WA) line is expected to close as production of the 787 falls below seven a month. Boeing previously announced the rate will fall from a peak of 14/mo to 6/mo by 2022.

With the closure of the 747 line in Everett slated for 2022, this will open huge bays in Everett. Nearly half the world’s largest building by volume will be empty. Given lower production rates because of the COVID-19 pandemic, the 777 lines will be woefully underutilized.

Overhead costs probably can’t be absorbed by the remaining low-rate production 767/KC-46A and 777 lines. Boeing warned in its 2Q2020 10Q SEC filing that the 787 and 777 lines face a forward loss depending on production rates of other lines.

With no New Midmarket Airplane (NMA) being contemplated to fill the empty bays, what can Boeing do to utilize these massive spaces and retain profitability of Everett?

A radical solution is moving the 737 line from Renton to Everett. This means Renton would close well before the 2033 date LNA predicts and selling off the property for commercial development.


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FAA administrator flies MAX in next step to recertification

By Scott Hamilton

Sept. 30, 2020, © Leeham News: Boeing is one step closer to recertifying the 737 MAX.

Steve Dickson

Steve Dickson, the administrator of the Federal Aviation Administration, fulfilled a pledge this morning to pilot the MAX as one of the final steps in the recertification process.

The MAX was grounded in March 2019 following the second fatal accident of the airplane in five months.

Dickson said he would not recertify the airplane until he piloted it and was satisfied Boeing redesigned the now-infamous MCAS software that triggered events leading to the two crashes.

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HOTR: Somewhat stabilizing twin-aisle lease rates

By the Leeham News Staff

Sept. 22, 2020, © Leeham News: Ishka, the UK-based appraisal and consultancy firm, Thursday published its update of values and rents for 5-year old, twin-aisle aircraft. After a significant reduction since the beginning of the year, lease rates seem to be stabilizing.

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Why is the 737 MAX safe now when it wasn’t before?

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Now open to all readers.

By Bjorn Fehrm

Introduction  

September 14, 2020, © Leeham News: The FAA and EASA Safety of Flight authorities have examined and test flown the changes Boeing has done to the 737 MAX to make it safe to fly again. Everything points to these authorities re-certifying the 737 MAX as safe to fly in the coming months.

In a Saturday article Dominic Gates of The Seattle Times quotes from a recent interview with me and an experienced 737 Captain, Mike Gerzanics, where we both say we consider the MAX safe to fly with the changes.

Here my reasons as an aeronautical engineer why I think so.

Summary

  • The original design of a smoothing software for the 737 MAX flight control system was badly implemented.
  • It’s not the changes to the 737 MAX base aircraft that makes it unsafe, such as larger engines, it was an unusually sloppy implementation of the smoothing software, called MCAS, that was flawed.
  • MCAS is now properly implemented and tested. This returns the 737 to the safe aircraft it was before MCAS was implemented.

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HOTR: Boeing warns of forward losses on 787, 777X programs

By the Leeham News Staff

Aug. 5, 2020, © Leeham News: In another demonstration of the negative impact of the COVID-19 crisis, Boeing warned that two flagship airplane programs could face forward losses.

Neither the 787 nor the 777X are in forward loss positions yet. A forward loss means Boeing won’t make money on the program.

Despite the 787 incurring more than $30bn in deferred costs, Boeing hasn’t taken a write down. The deferred costs have been burning off since 2015. Other programs have been subjected to forward losses, including the 747-8, VC-25 (Air Force One) and the KC-46A tanker.

But with the production reduction of the 787, down to 6/mo in 2021, Boeing now says there is a risk to a forward loss.

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