Analysis: Jefferies presentations show industry hasn’t stabilized post-Covid

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By Bryan Corliss

Sept. 11, 2023, © Leeham News: Negative cash flow in the quarters ahead. Ongoing issues with the supply chain. OEMs struggling to meet high airline demand as Tier 1s wrestle with quality issues. New technology wearing out faster than the old systems it replaced.

The No. 1 takeaway from last week’s Jefferies Financial Group Industrials Conference presentations is that the aerospace industry is still a few years away from being in a stable state capable of meeting the demands of customers and shareholders alike.

“We know our customers really do want to make more,” said Howmet CEO John Plant, whose company casts fasteners and engine components for Tier 1s and OEMs. “The question becomes when can we achieve these improved rates?”

Plant went on to say that he believes both Airbus and Boeing will hit their goals for increased widebody production; Airbus at 9/mo  on the A350, Boeing at 10/mo for the 787. 

The question, he said, is whether the OEMs will hit those rates in 2025 or 2026.

Executives from Boeing, Spirit AeroSystems and Howmet all presented at the conference, and all agreed that there’s reason to be optimistic, given the strong demand from airlines for more planes. 

The issue, as Plant put it, is the industry’s ability to meet that demand. “We haven’t seen the real benefits of increased aerospace production.”

  • Companies discuss latest 737 quality issue
  • Spirit tries to get on track as refinance deadline looms
  • Gentile: Supply chain needs new contract terms
  • Boeing CFO projects losses for next quarter
  • Howmet talks about engine challenges
  • Takeaway: Fundamental demand is strong, but…

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Calhoun’s moonshot for the Next Boeing Airplane

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By Scott Hamilton

David Calhoun

Sept. 4, 2023, © Leeham News: As people try to figure out when Boeing is going to launch a new airplane, confusion continues over semantics and doubts continue over willingness.

The semantics revolves around the words “launch” and “introduce.”

Brian West, the CFO of The Boeing Co., appears at an investors conference Sept. 7 hosted by Jefferies, an investment bank. The event will be webcast; a link is available on the Boeing website. Perhaps West can clarify the timeline, but here is what’s happened recently.

David Calhoun, the CEO of The Boeing Co., said during Boeing’s investors’ day event on Nov. 2 last year that Boeing will “introduce” a new airplane by the middle of the next decade. LNA at that time asked corporate communications if by “introduce” Calhoun meant entry-into-service or a program launch. Corp Com replied that Calhoun meant EIS.

Last month, at another investors conference, a lower level Boeing official said Boeing would “launch” its next airplane by the middle of the next decade. If this is what the official meant, “launching” the next airplane by mid-next decade would represent a major shift. LNA figured the official was mixing words and asked Corp Com for clarity. A spokesman replied, go with Calhoun’s November statement. So, for the moment, let’s take this at face value.

Then there are the skeptics.

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UPDATED: Boeing posts quarterly loss; increases Commercial production rates

By Bryan Corliss

July 26, 2023, (c) Leeham News — The Boeing Co. on Wednesday reported a quarterly loss of $99 million, due in part to spending tied to production rate increases in its Commercial Airplanes division.

Boeing said that rates on its 737 line in Renton are increasing to 38 a month. The 787 program has increased rates to four a month, with a plan to increase that to five a month by the end of this year.

Boeing is working with suppliers to get rates up to 50 a month on the 737 line sometime in 2025-26. CEO Dave Calhoun said during Wednesday earning call that demand is there for even higher rates.

“I’d love to get to 60 and the market is there for it,” he said. “The industry is short of airplanes by a relatively large margin.”

However, Boeing and its suppliers need to stabilize production at currently projected rates before considering going beyond what’s already been announced, the CEO said. “We’re going to work hard on stability.”

For this year, Boeing said it expects to deliver between 400 and 450 737s, along with 70 to 80 787s.

  • Deliveries up at BCA
  • China: Boeing hopes for delivery restart
  • 777-X production to restart in 2023
  • Calhoun ‘intent on proving’ trans-sonic truss 
  • BDS continues to struggle

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Striking Machinists to vote Thursday on revised contract offer from Spirit

Striking Machinists Union members outside the Spirit AeroSystems plant in Wichita, KS./ Wichita Business Journal photo

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By Bryan Corliss

June 27, 2023, © Leeham News – Striking Machinists Union members at Spirit AeroSystems in Wichita will vote Thursday on a new contract offer from the company.

“The parties have reached a tentative agreement with the unanimous support of the entire Local 839 bargaining committee,” the union said Tuesday.

The tentative deal, which comes after three days of meetings between Spirit and union negotiators with a federal mediator, replaces the original offer rejected on June 21. Spirit shut down production at the Wichita plant the next day, and the union began picketing outside the factory on Saturday.

Spirit CEO Tom Gentile said his team “listened closely and worked hard in our talks over the last several days to further understand and address the priorities of our IAM-represented employees.”

Senior regional leaders of the International Association of Machinists are strongly recommending the deal.

“The contract is an industry-leading agreement that should make our members extremely proud,” IAM Southern Territory General Vice President Rickey Wallace and his chief of staff, Craig Martin, said in a statement released by the union.

A quick resolution to the walk-out would benefit Boeing. The Spirit plant in Wichita provides 70% of Boeing 737 aerostructures, along with nose sections for all other Boeing aircraft. It also provides components for the Airbus A220.

Thursday’s vote would require a simple majority for ratification. If it fails to get majority support, the strike would continue.

  • Deal walks back unpopular health plan changes
  • Bigger raises, reduced signing bonus
  • Contract would end mandatory weekend overtime
  • Union announced vote after meeting with stewards

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Update: Spirit presents revised contract offer to striking Wichita Machinists

Striking workers outside the Spirit AeroSystems plant in Wichita, KS./Wichita Business Journal photo

By Bryan Corliss

June 21, 2023, © Leeham News – Spirit AeroSystems has presented a revised contract offer to striking members of the International Association of Machinists.

“We have delivered a revised offer to the IAM following days of positive discussions with IAM representatives, along with the assistance of the federal mediator,” the company confirmed to LNA. “We remain committed to reaching a timely and fair resolution.”

IAM District Lodge 70 in Wichita, which is the parent organization for striking members of Local 839, announced Monday night that it would hold a mandatory meeting for union stewards today to discuss a contract offer. However, from the statement, it wasn’t clear whether the meeting would be to cover a new offer, or review the one that workers rejected with a 79% no vote June 21.

This morning, however, Spirit confirmed to Wichita station KSN-TV, as well as the Wichita Business Journal, that it had presented a revised offer to the IAM. Any details would be released later in coordination with the union, Spirit said.

Spirit and IAM negotiators have been meeting with a federal mediator since Saturday.

If Spirit has presented a revised offer, it would not be surprising that the union’s negotiating team would want to review it with union stewards before deciding whether to take it to the entire membership for a vote. The union stewards are full-time employees of Spirit who volunteer as union representatives to assist their coworkers in resolving questions surrounding pay, benefits and other contract questions. As such, they will have the best sense of how their coworkers would respond to the new offer.

Picket lines went up around the factory just after midnight Saturday morning. Today, with thunderstorms in the forecast, Spirit invited strikers to take cover in the shacks manned by security guards at the factory’s various gates. “Our primary concern is for their safety,” the company said.

 

 

Paris Day Four: Air show winds down as Spirit strike looms over industry

By Bryan Corliss

June 22, 2023, © Leeham News – The business portion of the Paris Air Show wound down today, with no new orders and news of a looming strike in Kansas that will soon grind Boeing aircraft production to a halt. 

It was a stark contrast to the high pre-show expectations. Some analysts were projecting we’d see between 2,000 and 3,000 new aircraft ordered this week in Paris. By our count, there were 1,084 – a sizable haul no doubt. However, 970 of those came from IndiGo and Air India, who had telegraphed their plans to place those orders before the show, and used Le Bourget as a backdrop for signing the papers. Read more

Paris Day Three: Boeing gets small orders; Airbus talks hydrogen and hiring

By Bryan Corliss

June 21, 2023, © Leeham News – After the flurry of news surrounding the blockbuster orders from IndiGo and Air India earlier in the week, Wednesday’s Paris Air Show news was relatively subdued, with Boeing announcing a handful of smaller orders from airlines and leasing companies.

Airbus had announcements of an MOU for a potential widebody order, successful trials of a hydrogen-fuel concept, an update on global hiring – and the winner of a design-the-livery content for its proposed A350F cargo jet.

We’ll need to see a major flurry of orders on Thursday, if we’re to get to the 2,000-plus orders some analysts projected for this year’s air show.

  • Indian start up adds 737s
  • Air Lease Corp adds 787s
  • Airbus halfway to 2023 hiring goal
  • First A350F will look like a packing tube

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Paris Day Two: Air India finalizes earlier deals; Embraer, ATR announce orders


By Bryan Corliss

June 20, 2023, © Leeham News – While Monday’s news from the Paris Air Show was dominated by the one big Airbus order from Indian carrier IndiGo, Tuesday saw a host of smaller deals announced by OEMs, airlines and leasing companies. 

IndiGo rival Air India also announced it had finalized its massive 470-jet order from February, which it had split between Boeing and Airbus. 

While there was a significant volume of deals announced Tuesday, in many cases, they were formal announcements of deals that OEMs already were carrying on their order books.

  • Air India finalizes Boeing, Airbus orders
  • Boeing lands orders from airlines, lessors
  • Airbus reveals new orders and buyers in previous deals
  • Embraer and ATR announce first deals of show
  • Eviation announces LOI for Alices

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Machinists Union members at Spirit to vote on four-year contract this week

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By Bryan Corliss

June 19, 2023, © Leeham News – Roughly 6,000 Machinists Union members at Spirit AeroSystems in Wichita will vote Wednesday on a proposed four-year contract that would significantly increase pay for hourly workers.

The bargaining committee for IAM Local 839 is recommending that its members accept the deal. 

“This is not an easy decision, but it is one that we believe is a good one,” the committee wrote in a letter to members on Friday.

It noted, however, that “the decision to accept or reject this offer is up to the membership,” and added that however the vote goes, the leadership “stands 100%” behind what the members decide. 

At least some of those members are vocally urging the deal be rejected. 

“How on earth did you think this is an offer we should accept?” one worker wrote on Local 839’s Facebook page. “You have betrayed us.”  

The current contract expires just after midnight Friday, June 23. 

  • Offer on its face is generous
  • Comes after 13 years without a new contract
  • Industry-wide ramifications should a strike occur

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Bjorn’s Corner: New aircraft technologies. Part 17P. Airframe with lower induced drag

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June 16, 2023, ©. Leeham News: This is a complementary article to Part 17. Airframe with lower induced drag. It discusses in detail the simulations we have done on a Truss Braced Wing, using our Aircraft Performance and Cost model to compare it to today’s wings and alternative future concepts.

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