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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How Boeing’s T-X and NMA are connected

By Bjorn Fehrm

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October 1, 2018, © Leeham News.: Boeing and its partner SAAB Thursday won a $9.2bn U.S. Air Force T-X Pilot Training contract. It was a win for its Defense, Space & Security division, yet it will have major implications for Boeing’s Commercial Airplane (BCA) division and the NMA.

The NMA will change the way Boeing develops, produces and supports airliners. The T-X is the pilot for this change.

Loose concept of the Boeing NMA. Source: The Air Current.

  • The focus of Boeing for the NMA is faster and lower cost development, cheaper production and an extended support offering.
  • The Military T-X program pilots the work practices needed to make this possible.

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Pontifications: Boeing wins certification of KC-46A; B-52 MRO model may be key to profits

By Scott Hamilton

Sept. 10, 2018, © Leeham News: While Boeing Commercial Aircraft grapples with more than four dozen unfinished 737s clogging the space at Renton Airport and Boeing Field, Boeing Defense had some good news last week:

The KC-46A received certification from the US Federal Aviation Administration and the first delivery is due for late October.

Final military certification is still to come and the wing-pod drogues need certifying, but at long last, Boeing can move forward.

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Airbus Business Line Services ramping up

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Aug. 13, 2018, © Leeham News: While Boeing aggressively pushes its new business unit, Boeing Global Services (BGS), on a trajectory for a $50bn revenue target in 10 years, Airbus quietly has its own services operation.

Airbus services has a goal to reach $10bn in revenue over the next decade for its commercial services. In 2017, the Airbus Group revenue of $9bn was split roughly evenly between commercial, helicopters and defense.

BGS’ revenue target includes all services.

Unlike BGS, Airbus services are not a separate business unit/profit center. Ironically, the Airbus website describes the airliner-part as “commercial aircraft services.” Boeing’s airliner services operation was called Commercial Aviation Services, or CAS, before CAS merged with the Boeing defense operation to form BGS. The business line is promoted as Services by Airbus in collateral material.

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