Pontifications: Busting the XWB brand; and more about the Boeing-IAG deal

  • Dissecting the British Airways-Boeing MAX deal, part 2

By Scott Hamilton

July 1, 2019, © Leeham News: During the Airbus Innovation Days, and in other forums, officials promoted the idea of a 10-abreast coach-class in the A350 XWB.

Compared with the 10-abreast Boeing 777X, officials said the economics of the A350-1000 are unbeatable (along with other claims).

Boeing claims the 777-9 is 25% more economical on a per-seat basis than the A350-1000.

This is an unfair comparison, of course, because the -9 seats about 40 more passengers than the -1000 at nine abreast. Hence, the push for a 10-abreast A350.

All well and good, except a 10-abreast A350 totally busts the XWB brand built up so carefully since it was launched some 10 years ago.

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IAG’s super MAX deal likely means super discounts, services

June 20, 2019, © Leeham News: Boeing gets a Letter of Intent for 200 737 MAXes from International Airlines Group (British Airways, et al), announced Tuesday at the Paris Air Show.

Today, Airbus complained the deal came as a surprise—there hadn’t been a tender, Airbus had no chance to bid.

Christian Scherer, meet John Leahy.

Scherer is Leahy’s successor, and like Scherer, Leahy was blindsided in 1996 when American Airlines signed a 20-year exclusive procurement deal with Boeing.

Then, Delta and Continental airlines did the same.

Leahy complained bitterly that he didn’t know of American’s deal and had had no chance to bid.

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Pontifications: Doubts continue over Boeing NMA launch

March 4, 2019, © Leeham News: Another week, another NMA story.

For an airplane that doesn’t exist, the prospective Boeing NMA continues to dominate much of the aerospace news.

By Scott Hamilton

Last week’s announcement by Rolls-Royce that it withdrew—in December, as it turns out—from the competition to power the NMA prompted a flurry of stories in aerospace media, including LNA.

Some stories suggested RR’s withdrawal meant Boeing was getting closer to launching the airplane.

Boeing, in January, said Authority to Offer might come this year and program launch had moved from 2019 to 2020.

Two prominent consultants predicted at the Pacific Northwest Aerospace Alliance conference last month the odds were 60-40 or 65-35 Boeing would proceed.

Maybe, but I have to tell you that conversations I had last week in the wake of the Rolls announcement are not encouraging.

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Boeing expects another banner year for customers

By Dan Catchpole

Danieljcatchpole[at]gmail[dot]com

Feb. 13, 2019, © Leeham News: Boeing Commercial Airplanes expects another banner year in 2019, Randy Tinseth, BCA vice president of marketing, said Tuesday at the PNAA conference.

The airplane maker expects its customers to make about $36 billion in profit this year, he said. That would make five consecutive years of BCA customers recording more than $30 billion in profits.

Tinseth declined to comment on the company’s decision to delay possibly launching the New Midmarket Airplane (NMA) to 2020. However, as Boeing CEO Dennis Muilenburg noted during the Jan. 30 earnings call, Boeing likely will seek authority to offer this year from its board of directors.

He did say he was surprised to hear so many people already referring to it as the 797.

“I can tell you one thing—that has not been discussed,” Tinseth said.

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Pontifications: Countdown to decision on Boeing’s NMA, Part 1

By Scott Hamilton

Jan. 14, 2019, © Leeham Co.: Two thousand nineteen begins with increasing focus on whether Boeing is going to launch the New Midmarket Aircraft (NMA, aka 797).

Signs all point to a program launch, perhaps at the Paris Air Show. Authority to Offer (ATO) the airplane for sale is expected by March or April.

Engine companies were asked to respond to Requests for Proposals by the end of December. Engine down select is expected soon.

LNC’s Dan Catchpole will be reporting on this process soon.

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NMA must stand on its own business case

Dec. 6, 2018, © Leeham News: The prospective Boeing 797 (NMA) must stand on its own business case and not rely on aftermarket contracts for a profitable program, reports investment bank JP Morgan.

JPM’s aerospace analyst Seth Seifman met with Boeing CEO Dennis Muilenburg, CFO Greg Smith and Boeing Commercial Airplanes VP-marketing Randy Tinseth Dec. 4. In a research note issued yesterday, Seifman reported that the business case for the New Midmarket Aircraft still hasn’t closed—but “if Boeing launches the NMA, it will be with the intention of earning a return on the aircraft itself that is comparable to existing programs; it will not be a plan to accept lower margins on the aircraft and make it up in the aftermarket.” (Emphasis in original.) Read more

Boeing reports strong 3Q results

Oct. 24, 2018: Boeing reported a stronger than expected third quarter when it announced financial results today.

The press release is here.

The stock was up more than 3% ($10.87) in early morning trading.

Wall Street analysts issued these quick notes ahead of the earnings call:

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Pontifications: Market Intelligence from NY

By Scott Hamilton

Oct. 22, 2018, © Leeham News: I was in New York City last week for a series of meetings. Here’s what “the street” is talking about. I make no judgment calls about whether the thoughts are on target or not. Read more

Boeing’s transition in supply chain management aims to save hundreds of millions of dollars

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Oct. 8, 2018, © Leeham News: As Boeing moves toward more automation, digital twins and 3D printing to streamline manufacturing and reduce costs, behind the scenes another major initiative has been underway for more than a year.

It’s the shift from its decades-old Enterprise Resource Planning system to a new, expanded one called Systems Applications Projects.

ERP manages parts and inventory. SAP is an evolution of ERP, important as Boeing plans to up production of the 737 and 787 and nears a decision whether to launch the New Midmarket Aircraft (NMA).

The transition is complex and will take years to fully accomplish.

Synergizing scores of old processes covering a billion parts, requiring meticulous data entry, is a daunting task. In fact, after running into problems in June, Boeing Commercial Airplanes’ transition has been delayed, reports the aerospace analyst for Cowen & Co.

A glitch in the system can have ramifications that interrupt production and create traveled work that can delay airplane deliveries to customers.

A system that works as it should streamlines delivery of parts and reduces costs for Boeing—and, theoretically, also its suppliers.

It’s a delicate balance where one misidentified entry into the computer can create problems.

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Pontifications: “Enterprise P&L” key to NMA business case

By Scott Hamilton

Oct. 4, 2018, © Leeham News: A consensus appears to have developed among aerospace analysts that the business model for the prospective Boeing New Midmarket Aircraft is about much more than the profit-and-loss case for a stand-alone airplane program.

It’s something that Boeing CEO Dennis Muilenburg has alluded to many times on earnings calls and elsewhere.

But now, as Boeing moves toward a decision to launch the NMA program next year, the business model has fundamentally become defined.

Note that I say, “toward a decision,” not “if the program will be launched.” I’m convinced Boeing will greenlight the NMA.

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