By Scott Hamilton
Feb. 20, 2020, © Leeham News: Boeing may have just checkmated Airbus in the long-running trade dispute between the US and European Union.
In an unexpected move, Boeing and Washington State crafted legislation to void tax breaks dating to 2003. The tax breaks were given to support development and assembly of the 787 in Washington. They were extended in 2013 to support assembly of the 777X in Washington.
The tax breaks were found to be illegal by the World Trade Organization. The US appealed the amount of damaged. An outcome is pending was due in May or June.
This case is parallel to another against Airbus. The WTO found Airbus received illegal subsidies and failed to cure them in connection with the A350 and A380 programs. All Airbus airplanes imported into the US, along with other goods unrelated to aerospace imported from the EU, are now subject to tariffs. The Airbus planes have been taxed at a 10% rate since October. This goes up to 15% in March.
By Scott Hamilton
Feb 19, 2020, © Leeham News: Boeing says it is helping some suppliers with liquidity while the 737 MAX is grounded.
Other suppliers complain that Boeing is dunning them for alleged bad workmanship, squeezing cash. Still others say Boeing proposes not paying them for MAX parts until every regulator in the world recertifies the airplane. There are some 80 regulators who have to approve restoring the MAX to service.
And one Tier 1 supplier, Leonardo, sued Boeing Dec. 23 for withholding $20m in payments for 767 slats. Boeing alleges faulty workmanship. Leonardo says Boeing won’t provide documentation of this claim.
(US District Court for Western Washington, 2:19-cv-02082-JLR.)
Boeing’s tactic of withholding payments for claims against future invoicing was echoed by some of the suppliers attending the annual conference of Pacific Northwest Aerospace Alliance Feb. 4-6. Some complained Boeing is using them for its “bank.” It’s a complaint of long-standing even if for different reasons.
By Scott Hamilton
Feb. 18, 2020, © Leeham News: Boeing recently discovered some of its stored 737 MAXes have foreign objects in the fuel tanks.
Foreign objects, called foreign object debris (FOD) in aviation parlance, consist of tools or rags. FOD has been found in the fuel tanks of some MAXes. MAXes are stored at four locations in Washington State and in San Antonio (TX).
It’s unlikely that the FOD inspections will delay recertification or testing of the MAX.
Feb. 17, 2020, © Leeham News: Boeing executives said that while the 737 MAX production is suspended, efficiencies are being implemented on the assembly lines.
At a Cowen & Co. conference last week, EVP and CFO Greg Smith outlined some of the efficiencies that are being put in place.
But another area that could be improved, not addressed by Smith, while the lines are shut down is supply chain tracking. This has huge ramifications for cost savings and streamlining. It’s part of the business plan for the next new airplane, whatever this is.
This process is called ERP, or Enterprise Resource Planning. Boeing is transitioning to a more advanced method, called SAP, or Systems Applications Projects.
Boeing Australia and Boeing Global Services have made the transition. But Boeing Commercial Airplanes’ transition is stalled due to middle management inertia, said several people who attended the Pacific Northwest Aerospace Alliance annual conference Feb. 4-6.
Boeing should use the production halt and slow ramp up to implement SAP, they said.
By Scott Hamilton
Feb. 14, 2020, © Leeham News: It will take Boeing years to deliver new production airplanes scheduled for delivery in 2020-2023 because the restart of the 737 MAX production will fall far short of delivery commitments.
There are an estimated 2,682 deliveries scheduled in this timeframe. Boeing’s production restart and ramp up provides delivery positions for an estimated 1,827 aircraft. This leaves an estimated 855 aircraft that will have to be rescheduled into the future, from 2023.
These will compete with Boeing sales for new order delivery slots. For example, the MOU for 200 MAXes from IAG, the parent of British Airways and other carriers, has delivery slots in these periods.
An analysis by LNA indicates it will take at least until 2026 to deliver these 855 airplane if no other orders are slotted in through 2025.
Feb. 13, 2020, © Leeham News: A Seattle law firm filed what is believed to be the first lawsuit over the Boeing 737 MAX crisis in King County Superior Court.
Lane Powell PC filed the lawsuit (20-2-04003-7) naming The Boeing Co. and BCA as defendants. The plaintiffs are two special purpose companies (SPC) that own two 737-8-based MAX BBJs (business jets.) This is believed to be the first BBJ owners to file suit against Boeing.
By Judson Rollins
February 13, 2020, © Leeham News: Despite depressed turnout at this year’s Singapore Airshow, there was still plenty of conversation around the return to service for Boeing’s beleaguered 737 MAX – and potential impacts on the certification of the 777X.
Feb. 9, 2020, © Leeham News: The principal provider of airliner simulators sold six for the Boeing 737 MAX since the first of the year.
In the third quarters earnings call Friday, Marc Parent, president and CEO, said that a “high majority” of airlines that ordered the MAX have ordered a simulator from CAE.
CAE has about 80% of the simulator market.
There are 36 MAX simulators across the globe now from all providers. CAE, as of the end of the year, provided 23 of them.
By Vincent Valery
Feb. 10, 2020, © Leeham News: Airbus Commercial Aircraft ended 2019 with a surprisingly strong 1,131 new aircraft orders (768 net orders) and a backlog of 7,482 aircraft.
There were 863 aircraft deliveries, 8% higher than in 2018
But 2019 also sees settlement of a year-year probe into bribes and corruption of Airbus commercial airplane sales dating back years. A record fine of €3.6bn will be recorded against 2019 earnings. These results will be announced on Feb. 13.
Settling the probe lets Airbus off the hook from criminal prosecution, providing its skirts remain clean for the next three years.
But prosecution against individuals may proceed. The potential targets have not been identified.
Feb. 10, 2020, © Leeham News: The was plenty of angst among suppliers last week at the annual Pacific Northwest Aerospace Alliance conference.
Worries about the production shutdown, its duration and lack of communication from Boeing prevailed.
But there were in fact rays of sunshine beginning to break through the dark clouds of the last year.
Some suppliers—not many—reported that they’ve been told to begin shipping parts and components as early as March 1.
This gives hope that production will resume in April.
To be sure, the good news is mixed with a lot of bad news for suppliers. Some laid off workers and more layoffs are yet to come.