Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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Pontifications: Muilenburg’s departure wouldn’t go far enough
By Scott Hamilton
Oct. 7, 2019, © Leeham News: A recent call for Boeing CEO Dennis Muilenburg by my friend Ernie Arvai to resign or be removed has a litany of woes at the company that occurred under the CEO.
These mostly relate to the 737 MAX crisis, but also include the policy of returning free cash flow to shareholders rather than investing in new airplanes. Other issues are also cited.
Arvai makes many good points, but he doesn’t go far enough.
If Muilenburg deserves to go, so does Greg Smith, the Chief Financial Officer and Executive Vice President, Enterprise Performance & Strategy.
The emphasis on cost control, which have become part of the focus of the MAX development, emanates from Smith. The strategy for new products ultimately falls under Smith, who vehemently opposes investment in the New Midmarket Airplane.
If these two deserve to go, so do the Board of Directors.
It’s the Board of Directors who set the shareholders’ value policy that Muilenburg carries out.
Bjorn’s Corner: Fly by steel or electrical wire, Part 11
October 4, 2019, ©. Leeham News: In our series about classical flight controls (“fly by steel wire”) and Fly-By-Wire (FBW or “fly by electrical wire”) we now discuss pitch stability augmentation systems when we need to improve the pitch characteristics of a mechanical (“fly by steel wire”) pitch control system.
Figure 1. The pitch moment curve of a modern airliner when circling before landing. Source: Leeham Co.
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Pontifications: Safety changes good for Boeing, the industry
By Scott Hamilton
Sept. 30, 2019, © Leeham News: Boeing’s announcement last week that it’s establish a permanent Board level safety committee, realigning some functions and creating new lines of reporting is a good and necessary step.
It’s not only good and necessary for the 737 MAX return to service, it’s good and necessary for Boeing and for the industry.
It’s also just a first step in restoring confidence in the MAX and the Boeing brands.
EU ready to instantly retaliate if US imposes tariffs in Airbus WTO case
Sept. 29, 2019, © Leeham News: The European Union is ready to retaliate against the US for any tariffs imposed, as early as October, in response
to the World Trade Organization authorization to do so in connection with the Airbus subsidies case.
Even though the EU’s case against Boeing before the WTO, seeking authorization to impose subsidies for Boeing’s illegal subsidies, won’t be finished until next spring, the EU, French and German authorities pointed out that previous WTO cases against the US which they won allow them to impose tariffs they haven’t levied.
They are prepared to do so immediately in the Trump Administration levies tariffs on European goods.
Bjorn’s Corner: Fly by steel or electrical wire, Part 10
By Bjorn Fehrm
September 27, 2019, ©. Leeham News: In our series about classical flight controls (“fly by steel wire”) and Fly-By-Wire (FBW or “fly by electrical wire”) we started a discussion about the need for stability augmentation systems last week and how these are implemented.
We handled yaw augmentation and began the discussion on pitch augmentation. Now we dig deeper into the trickier form of pitch augmentation, the one needed because of regions of lower stability in pitch at higher Angles of Attack (AoA).
Figure 1. The pitch moment curve of a modern airliner. Source: Leeham Co.
Boeing Board Aerospace Safety Committee recommends realignment, enhancement of procedures
Admiral Edmund Giambastiani (Ret). Photo credit: Wetheitalians.com
Sept. 25, 2019, © Leeham News: Boeing today outlined the results of the investigation of a special Board of Directors committee formed in August that creates new processes and organizational structures aimed at preventing another 737 MAX crisis and improving safety within Boeing Commercial Airplanes.
The Board-level Aerospace Safety Committee is the four-member committee announced by Boeing CEO Dennis Muilenburg following the second fatal accident of the MAX in March.
Admiral Edmund Giambastiani (Ret), a former nuclear submarine officer, chaired the committee. As a result of the committee’s work, the following recommendations have been made:
- Create a Product and Services Safety Organization;
- Realign the Engineering Function;
- Establish a Design Requirements Program;
- Enhance the Continued Operation Safety Program;
- Re-examine flight deck design and operation; and
- Expand the role and reach of the Safety Promotion Center.
Bjorn’s Corner: Fly by steel or electrical wire, Part 9
By Bjorn Fehrm
September 20, 2019, ©. Leeham News: In our series about classical flight controls (“fly by steel wire”) and Fly-By-Wire (FBW or “fly by electrical wire”) we discussed the FBW flight control system of Embraer’s E-Jet E2 series last week.
We have now covered examples of classical flight controls and their modern FBW counterparts. Now we discuss how these handle different stability augmentation needs like Yaw damping, Mach tuck protection or Pitch control improvements like the Boeing 737 MAX MCAS system.
Figure 1. The pitch moment curve of a modern airliner. Source: Leeham Co.
Lower interest rates, a tailwind for new orders
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By Vincent Valery
Introduction
Sep. 16, 2019, © Leeham News: Over the last few weeks, LNA outlined significant production gaps from 2022 onwards for the major widebody programs at Airbus and Boeing. The OEMs expect airlines to place large fleet renewal orders to fill those.
Aircraft deliveries need to be financed one way or another. Access to affordable financing is crucial for airlines and lessors to make good on their orders.
Interest rates in the world’s major currencies hit an all-time low a few weeks ago. The 30-year US Treasury yield dipped below 2%, while the 10Y German Bund was at -70 basis points.
Corporations duly took advantage of the lower rates to issue record amounts of debt in US dollars during the first week of September. United Airlines and Bank of China Aviation were among them.
We will analyze how lower interest rates could benefit the aviation industry.
Summary
- Varying interest rate exposure for airlines and lessors.
- Level of access to capital markets among airlines.
- Hurdles to capitalize on low interest rates.
- Unlikely beneficiaries if low rates persist in the near future.
- Boosting new widebody order prospects.
WTO clears US for $10bn in tariffs in Airbus subsidy case
Sept. 14, 2019, © Leeham News: The World Trade organization Friday concluded that the US may impose up to $10bn in tariffs against the European Union as a final result of the 15-year trade dispute over Airbus subsidies.
Politico first reported the WTO decision, which has not been made public.
Airbus issued a terse statement.
“The WTO decision is neither public nor authorized for release. We do not comment on rumors on a report that is not public,” a spokesman said in an email. “Aviation is a global industry, and no aircraft comes from one single country or zone. Nobody will win — it’s a lose-lose for the whole industry if we move to tariffs.”
Boeing declined comment.
Look to 2013 787 grounding to see how Boeing will return MAX to service
By Scott Hamilton
Sept. 13, 2019, © Leeham News: As Boeing prepares for what it hopes is an imminent recertification of the 737 MAX from the Federal Aviation Administration, how it will handle the logistics of returning 381 grounded airplanes to service and delivering nearly 300 more undelivered 737s is key.
One need look to the only other time a Boeing jetliner, the 787, was grounded and how “One Boeing” coalesced to attack what was then its largest logistical task for its commercial airplanes unit.
The return to service of the 787 paled compared with the task facing Boeing today. In 2013, there were only 50 787s grounded worldwide after two lithium ion battery incidents: one fire and one near-fire, one on the ground and the other as the airplane took off.
In 2013, the production rate of the 787 was in the single digits per month. The 737 is being produced at a rate of 42/mo.
In 2013, there were a few score of 787s parked around Everett’s Paine Field awaiting delivery. Today, the nearly 600 737s are scattered around four locations in Washington State, a Boeing facility in Texas and various airline storage areas around the globe.
In May 2013, I wrote a freelance piece for CNN’s website how Boeing planned to return the 787 to service. This story may be found here.