By Vincent Valery
Jan. 20, 2020, © Leeham News: Talks about climate change and the need to reduce human-induced carbon emissions are nowadays a daily occurrence in Western media. After years of faster-than-trend growth in global passenger numbers, aviation-induced carbon emissions commensurably increased in spite of record deliveries in latest-generation, fuel-efficient planes.
As a result of this growth, airlines have been one of the main targets of environmental groups. The high growth culminated in the start of the flight-shame movement that originated in Sweden (flygskam). As outlined in a previous LNA article, there are discussions about introducing a jet fuel tax for all flights within the European Union.
Airbus is committed to the “decarbonization” of its next airplane design.
Boeing’s next move for a new airplane has been sidetracked by the 737 MAX crisis.
Embraer is devoting considerable effort to developing a “green” airplane.
Jan. 20, 2020, © Leeham News: David Calhoun has been CEO of The Boeing Co. for a week. A couple of new problems arose.
Late last week, the US Air Force weighed in that it’s unhappy, again, with Boeing over the KC-46A program. The Air Force was previously open about its dissatisfaction with Boeing’s performance. But top officials were quick to contact the new CEO with its unhappiness.
A new software problem was found on the 737 MAX which may add some time to the recertification timeline. The problem involves booting up two computers on start up and isn’t considered a big issue.
Last week, LNA posted a series of articles about Calhoun’s immediate challenges.
Last November, LNA posted a graphic that listed a host of problems that occurred under Denis Muilenburg’s watch. Calhoun must deal with these, too.
Today, we take a look at another challenge Calhoun must face: Boeing’s commercial airplane product strategy.
Jan. 16, 2020, © Leeham News: Air Canada inaugurates Airbus A220-300 service today, becoming the second North American carrier to operate the A220. Delta Air Lines was the first, with the A220-100 last year.
It is the first North American airline to operate the -300 model. The new service begins on the Montreal-Calgary route.
Airline and Airbus officials paid homage to Bombardier at a celebration yesterday in an Air Canada hanger down the block from Bombardier’s world headquarters on the edges of Montreal Dorval Airport.
Bombardier designed the aircraft, originally called C Series, in a bet-the-company challenge to Airbus and Boeing.
By Scott Hamilton
Jan. 16, 2020, © Leeham News: Certification of the Boeing 777X is far off. The airplane’s first flight hasn’t occurred. There is no date announced when it will, but sources suggest it could be this month.
The fallout from the 737 MAX crisis and its certification process isn’t fully understood. Neither Boeing nor the Federal Aviation Administration announced what the 777X process will be.
It’s assumed that the discoveries about the MAX certification process will result in a revision to the FAA’s approach to 777X certification.
There are questions circulating in the aviation community whether the FAA will revisit every certification step done so far for the 777X and what it will look like in the future.
A new question arises: will the 777X be certified as a derivative of the 777 Classic—the path Boeing wants. Or will the FAA decide that enough changes are designed into the 777X that it needs an entirely new type certificate?
By Bjorn Fehrm
January 16, 2020, © Leeham News: Last week we started the analysis of how much margin the Boeing 787 program is generating to cover the costs for The Boeing Company’s Commercial Airplanes division when the other cash cow, the 737 MAX program, brings no revenue or margin.
The 787 program is now in a state where it generates significant revenue and margin. The other programs, the 767 and 747 freighters, the 737NG (P-8A Poseidon) and 777 Classic make up less than 45% of deliveries with the 787 covering 55% of deliveries, and these programs are in phases where they deliver less margin.
By Scott Hamilton
Jan. 15, 2020, © Leeham News: The extent of the damage to Boeing from the 737 MAX crisis still is unfolding.
But the long-term effects, only surmised until now, are beginning to become evident following information obtained by LNA from multiple sources.
Boeing hasn’t hit bottom yet. The worst is yet to come for suppliers.
By Scott Hamilton
Jan. 14, 2020, © Leeham News: Boeing likely faces an extended timeline to clear its inventory of 400 737 MAXes. LNA estimates it will be well into 2022 before these new-production airplanes are delivered to customers.
The new timeline is based on LNA discussions with key people and our analysis. Boeing won’t comment. Wall Street analysts so far haven’t significantly shifted their forecasts of 3Q or 4Q2021.
The decision last year by the Federal Aviation Administration to assume responsibility to certify each Boeing 737 MAX before delivery is key to LNA’s estimate.
Jan. 13, 2020, © Leeham News: Today is David Calhoun’s first day as the president and CEO of The Boeing Co.
To say that he’s got his work cut out for him is an understatement.
I’ve put together a list below, which probably is only half of the important tasks at hand. Most of this list is obvious and doesn’t need any additional reporting because of all the coverage in 2019.
This column is focused on another task that should be, and in the view of many, must be done.
Boeing’s Board is preoccupied with the MAX crisis, but on the theory it can do more than one thing at a time, it need to also turn its attention to some introspection.
By Richard Aboulafia
Vice President of Analysis
The Teal Group
Dear Fellow C-Suite Watchers,
Person of the year awards go to people who did something noteworthy in the past year. Instead, why not appoint a person in advance, for the year ahead? That’s more exciting, since that person has yet to do the something for which he or she is being recognized. Incoming Boeing CEO Dave Calhoun is the perfect recipient of this, for the choice he will make. In 2020, he will choose either to be a fantastic nine-month CEO, or he will stay on, becoming a potentially disastrous multi-year CEO. This is a pivotal decision for Boeing, and for the industry.
Calhoun is replacing Dennis Muilenburg because the latter CEO’s year has been disastrous. The company’s communications with Congress, the FAA, international regulators, airline and lessor customers, suppliers, the victims’ families, and pretty much the entire outside world were a master class in bad crisis management. This month’s 737MAX line shutdown, with no guidance at all provided to suppliers, was the final swirl in a downward spiral. The company’s legal department chief, another key player in Boeing’s MAX strategy, has also departed.
By Bjorn Fehrm
January 9, 2020, © Leeham News: What a difference a decade made. In January 2010, the Boeing 787 Dreamliner had just made its much delayed first flight and its crisis was at its deepest. The aircraft would soon be more than three years late and its costs had more than doubled. One questioned if it would ever be a profitable program and how deep this money pit would drag Boeing?
Today, 10 years later, the 787 is Boeing Commercial Airplane’s sole cash cow, with a 737 MAX which can’t be delivered, the 777 in difficult migration to 777X and the 767 freighters just hanging in there profitability-wise.
But how profitable is the 787, eight years after its first delivery and coming from very red numbers? We look behind Boeing’s accounting rules to find how much of the company bills can be paid by Dreamliner profits when other programs can’t contribute.