Some predictions take years to resolve. The outcome of others come sooner than later. If you’re right, you look sage. If you’re wrong, you look like an idiot.
But HOTR is going to take a stab at it anyway.
By the Leeham News Team
Jan. 13, 2021, © Leeham News: Today marks the first anniversary of David Calhoun becoming CEO of The Boeing Co.
Calhoun’s first year faced challenges unprecedented in Boeing’s history. There was the 737 MAX crisis. Sales of the 777X were stagnant. The balance sheet was stressed.
And then COVID exploded, all but destroying commercial passenger demand and with it, ability by airlines to take delivery of new airplanes.
Boeing’s balance sheet went further upside down. Production and quality control problems with the 787 emerged.
Finally, Calhoun was afflicted with a case of foot-in-mouth disease. This contrasted with his calm, well-received initial public face during the waning days of then-CEO Dennis Muilenburg’s stilted public persona.
Jan. 11, 2021, © Leeham News: Last week appeared to be an ominous week for Washington State for aerospace.
On Monday, The Seattle Times reported that Amazon surpassed Boeing as Washington’s largest employer. The retailer now employs more than 80,000 in the state. Boeing, following COVID- and 737 MAX-grounding induced layoffs, employs just under 59,000 in Washington.
The Times reported Tuesday that Boeing’s research and development center at Boeing Field will be closed. At its peak, the center was to employ 900. The expansion began a mere 10 years ago.
Previously, Boeing announced Oct. 1 that it will close the Everett 787 production line and consolidate the final assembly at the Charleston (SC) plant.
The exodus by Boeing from Puget Sound and Washington State is underway. But was closing the R&D center as significant as it seemed?
Jan. 7, 2021, © Leeham News: Boeing today agreed to pay $2.5bn to settle criminal charges with the US Department of Justice over the 737 MAX investigation.
The settlement comes in the form of a Deferred Prosecution Agreement (DPA).
The DPA contemplates that the Company will: (1) make payments totaling $2,513.6 million, which consist of (a) a $243.6 million criminal monetary penalty; (b) $500 million in additional compensation to the heirs and/or beneficiaries of those who died in the Lion Air Flight 610 and Ethiopian Airlines Flight 302 accidents; and (c) $1.77 billion to the Company’s airline customers for harm incurred as a result of the grounding of the 737 MAX, offset in part by payments already made and the remainder satisfied through payments to be made prior to the termination of the DPA; (2) review its compliance program for implementation of continuous improvement efforts; and (3) implement enhanced compliance reporting and internal controls mechanisms. Under the terms of the DPA, the criminal information will be dismissed after three years, provided that the Company fully complies with its obligations under the DPA. Of the payments described above, $1.77 billion has been included in amounts reserved in prior quarters for 737 MAX customer considerations. The Company expects to incur earnings charges equal to the remaining $743.6 million in the fourth quarter of 2020.
However, Dominic Gates of the Seattle Times points out that “Only $243.6 million, less than 10%, is a fine for the criminal conduct. And Boeing must pay an additional $500 million compensation to the MAX crash victim families. However, 70% of the $2.5 billion cited is compensation to airline customers that Boeing has already agreed to pay.”
By Scott Hamilton and Vincent Valery
Jan. 5, 2021, © Leeham News: What’s in store for Airbus and Boeing this year?
Boeing needs a boring year.
Twenty-twenty one is a year of recovery for Boeing. It must dig out from a very deep hole.
Airbus reported that it hit cash break-even in the third quarter. But the company is not out of the woods yet.
Everything depends on something largely out of their control: how quickly the airline industry recovers from the COVID pandemic.
Jan. 4, 2021, © Leeham News: Beginning today through next week, Leeham News presents its annual Outlook series for the coming year.
We’ve been doing this for years. In recent years, the Outlook reflected continued growth in commercial aviation. The industry had the longest upward tick in the more than three decades I’ve been involved in the sector.
Not this year. As I wrote before the Christmas-New Year’s holiday period, 2020 was the worst year for commercial aviation I’ve ever seen in 41 years.
This year is the beginning of the end of the COVID crisis. Yes, the vaccines began distribution in December, but large spikes in COVID cases began simultaneously and are predicted to climb higher through the first quarter.
Over the coming days, as LNA provides its Outlook for 2021, readers will see what we believe will happen.
Dec. 31, 2020, © Leeham News: Airbus’ A320 Mobile (AL) plant is no longer exempt from tariffs applied by the US Trade Representative in the 16-year long trade war with the European Union.
Effective Jan. 12, the US will slap a 15% tax on fuselage, wing and tail components shipped from France and Germany to Mobile for final assembly on A320s and A321s.
This is a setback in what appeared to be progress in resolving at long last the trade war over subsidies to Airbus deemed illegal by the World Trade Organization.
The US also will apply tariffs on helicopter parts imported from France and Germany for Airbus assembly sites in Mississippi and other US locations.
Even before the pandemic, airlines faced an aging pilot workforce and regional airlines had difficulties finding and retaining pilots. The aging pilots get older during the layoffs. What kind of shortages will there be as the industry recovers over the next few years?
Kathryn Creedy, who writes for Leeham News and is editor of her own on-line newsletter, Future Aviation/Aerospace Workforce News, answers these and more questions in this episode of 10 Minutes About.
Dec. 29, 2020, © Leeham News: Stories and headlines shouted that this month’s Boeing order by Alaska Airlines adding 23 orders and 15 options to an existing agreement meant the death knell for the Airbus fleet.
Alaska indeed announced that all the A319s and A320s inherited from its acquisition of Virgin America will leave the fleet by 2024. But 10 Airbus A321neos remain at least through their lease terms in 2029.
The airline now has 68 Boeing 737 MAX 9s on order and 52 on option.
This is exactly as LNA suggested several times: rotate out the smaller Airbuses as leases expire and keep the larger A321neos.
COVID-19 accelerated the retirement of the smaller Airbus family members by a couple of years. But it never made sense to keep them in lieu of the 737-9 once Alaska committed to this plane several years ago.
But what of the old Virgin America order for 30 A320neos? These are still on the books.
CEO David Calhoun all but killed the New Midmarket Airplane when he took over from Dennis Muilenburg in January. A full product strategy review would be undertaken, he said.
Boeing always looks at alternatives. In addition to the twin-aisle NMA, Boeing also had a single-aisle airplane under study.
In this episode of 10 Minutes About, LNA discusses what Boeing’s Next New Airplane should be.