Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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- Bjorn’s Corner: Air Transport’s route to 2050. Part 18. April 18, 2025
IAM members throw down gauntlet to Boeing, overwhelmingly back strike
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By the Leeham News Team
July 22, 2024, © Leeham News: Boeing’s (BA) largest union in Seattle, the International Association of Machinists and Aerospace Workers (IAM) District 751 – voted overwhelmingly to authorize a strike if contract negotiations fail.
Thousands of members attended a rally at T-Mobile Park, home of the Seattle Mariners baseball team, during which “nearly” 99.9% voted to empower the union to strike, according to IAM representatives.
Workers in Washington State are seeking a 40% pay increase in an attempt to claw back concessions previously given to the company by the union. The Local represents over 30,000 members in the region, which includes the plants in Renton and Everett, where the 737 Max and 777 aircraft are assembled.
The current labor contract will expire on Sept. 12, 2024. With a successful mandate granted by the rank and file, leverage will be applied to Boeing in upcoming negotiations. “We want the company to take our proposals seriously and bargain earnestly,” said Jon Holden, President of IAM District 751.
It’s been 10 years since the last contract was approved. The basic contract was entered into after a 57-day strike in 2008. Boeing’s CEO at the time, Jim McNerney, then demanded concessions the following year in return for locating a second 787 assembly line in Everett (WA), the assembly plant for widebody airplanes. The IAM offered concessions, which Boeing said were inadequate, and the second line went to the production facility in Charleston (SC).
Boeing sees traffic recovery from pandemic, growth for future in latest forecast
By Scott Hamilton
July 19, 2024, © Leeham News: Boeing sees airline traffic recovery to near-pre-COVID pandemic levels in its latest 20-year forecast for aircraft demand.
It also sees growth through 2043 along similar lines announced by Airbus last week in its 20-year forecast. The numbers between Airbus and Boeing are inconsequentially different. Boeing includes regional jets in the 70-90 seat sector; Airbus doesn’t forecast the RJ market. Over the next 20 years, Boeing forecasts deliveries of just over 1,500 RJs—a market that has been shrinking for years.
Embraer, the sole manufacturer outside of China and Russia of RJs, hasn’t announced its 2024 forecast (this usually comes during the international air shows—Farnborough is next week). Nor does it break out the RJs in its forecast, which is for single-aisle jets up to 150 seats.
In its 2024 20-year forecast released last month, the Japan Aircraft Development Corp. (JADC) forecasts deliveries of 1,584 new RJs in the 61-100 seat sector—very close to the Boeing number for RJs and the Boeing and Airbus numbers overall. The JADC forecast is the only one to provide details for sub-sectors within the RJ, single-aisle, and twin-aisle markets.
Aircraft Certification: How the Max crashes changed everything
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By the Leeham News Team
The Airbus A321XLR got caught up in the new aircraft certification environment created by the Boeing 737 MAX crisis. Source: Airbus.
July 18, 2024, © Leeham News: Much of the attention in the airline industry has recently been focused on the production issues faced by both major OEMs, Airbus (AB) and Boeing (BA). Supply chains are snarled, airlines had to re-jig their fleets, keeping less efficient aircraft in service longer than they planned and financial performance suffered.
LNA recently drilled down and detailed the long-term effects on Southwest Airlines, which is dealing with jet certification delays and must make do with a less-than-ideal fleet mix.
One of the overlooked aspects are the consequences of the Boeing 737 Max 8 accidents and subsequent Alaska Airlines 737 Max 9 door plug blowout is the effect it is having on getting new, more efficient variants certified into service to replace older aircraft.
Both OEMs have been affected. Airbus had to push back the introduction of its A321XLR by about a year, but a detailed inspection by LNA reveals that Boeing is suffering more from the increased scrutiny of the FAA and Congress.
To what extent can the A321XLR replace the Boeing 757, Part 3
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By Bjorn Fehrm
July 11, 2024, © Leeham News: We are comparing the Airbus a321XLR to the Boeing 757 to understand to what extent it can replace the 757 on the longer routes it operates for major airlines like United, American, and Delta.
We have looked at the development and operational history of the aircraft, their Apples-to-Apples capacity and range. Now, we use Leeham’s Aircraft Performance and Cost Model (APCM) to compare the operational costs of the aircraft.
Summary:
- The Boeing 757-200 has the same passenger capacity as the A321LR/XLR and a larger cargo capacity.
- Its range can compete with the A321LR but not the XLR. Both beat the 757 on operational economics.
Boeing to plead guilty to new criminal charges related to MAX crisis
By Scott Hamilton
July 8, 2024, © Leeham News: Boeing agreed to plead guilty to new criminal charges related to the 2021 Deferred Prosecution Agreement that the US Department of Justice says the company failed to live up to.
By pleading guilty, Boeing avoids a trial. Some families of the 346 victims of two 737 MAX crashes in 2018 and 2019 already indicated they will object to this new agreement, which must be approved by a federal judge.
Boeing will pay a second fine of $243.6m, new conditions related to safety improvements (including spending at least $455m on new safety protocols) and a special overseer will be appointed to monitor Boeing’s compliance this time.
The second fine is identical to the first one in 2021. However, many—including LNA—view these fines as inadequate.
By comparison, previous DOJ Deferred Prosecution Agreements include larger fines for violations that did not include safety violations or deaths.
To what extent can the A321XLR replace the Boeing 757, Part 2
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By Bjorn Fehrm
July 4, 2024, © Leeham News: We are comparing the Airbus A321XLR to the Boeing 757 to understand to what extent it can replace the 757 on the longer routes it operates for major airlines like United, American, and Delta.
After Boeing didn’t do the obvious 757 replacement, the NMA and Airbus gradually eked out more range and seats on the A321; the A321LR/XLR is the only game in town to replace the 757, especially as the Boeing 737-10 availability continuously slips to the right.
Summary:
- The A321LR/XLR has the same passenger capacity as the 757-200.
- The 757-200 has the range of the A321LR but can’t match the A321XLR.
Boeing is fighting fire with fire in reacquiring Spirit Aero (Updated)
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By Dan Catchpole
Analysis
July 1, 2024, © Leeham News: This is an analysis of Boeing’s reported $4.7 billion purchase Spirit AeroSystems, as Reuters reported Sunday.
First, let’s set the frame.
Boeing seems incapable of doing anything right these days. Even a pre-Farnborough Airshow media briefing by the aerospace giant last week resulted in a reprimand from the National Transportation Safety Board for sharing information about its investigation into the panel blowout on an Alaska Airlines flight on Jan. 5.
The company is bleeding money in its commercial and defense divisions. Boeing could turn around its balance sheet if it could straighten out production for its cash cows—the 737 and 787. Yet somehow, both programs are still struggling.
Boeing’s pissed off the Federal Aviation Administration, the NTSB, key members of Congress, some of its biggest customers, and the Machinists union in Washington and Oregon, among others. Its current CEO is a lame duck who helped create the crises overwhelming the company. Potential successors have said they don’t want the job. Among the front-runners to succeed David Calhoun is BCA’s new CEO Stephanie Pope, who has no production or product development experience and has had few public appearances since she took over BCA in March. There are plenty more problems, but you get the point.
Spirit AeroSystems has been floundering since the COVID-19 pandemic threw the aviation industry into chaos. Since 2020, it has recorded $3.2 billion in net losses, including $617 million posted in the first quarter of this year. Boeing has helped keep the company afloat with financing and price changes.
In short: Boeing is fighting countless fires, and it just bought another one.
Can Boeing fight fire with fire?
To what extent can the A321XLR replace the Boeing 757, Part 1.
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By Bjorn Fehrm
June 27, 2024, © Leeham News: The Airbus A321XLR, the extra-long-range version of the A321neo, will start operational service with IBERIA on the Madrid-Boston trans-Atlantic route later this year. It’s the type of thin, long-range route the Boeing 757 has served to date.
We will use our Aircraft Performance and Cost model (APCM) to examine to what extent the A321XLR can replace the 757 on world routes. What is the difference in capacity and range, and what improvement in operational economics can be expected?
Summary:
- The Boeing 757 was the original MOM/NMA (Middle-Of-the-Market / New-Midmarket-Airplane).
- It had unique characteristics, which Boeing would have followed up with the NMA project.
- Boeing hesitated, and Airbus developed the A321XLR to fill this role. Has it succeeded?
Boeing simply can’t afford a cash deal for Spirit AeroSystems
By Scott Hamilton
Analysis
June 25, 2024, © Leeham News: News that Boeing over the weekend wanted to acquire Spirit AeroSystems through a stock rather than a cash transaction should surprise absolutely nobody.
Anyone following Boeing’s financial performance and weak balance sheet could see this one coming.
Boeing’s financial condition is a mess. Frankly, it’s unfathomable that the credit agencies still rate Boeing as investment grade, albeit at the lowest level.
Boeing’s production rate is a mess and so is its quality control. There is no end in sight. There is not assurance when certifications of the 737-7, 737-10 and 779-9 will occur. Boeing apparently shifted engineers from its X-66A Truss Brace Wing project these programs, things are so bad. This shifts development of a new airplane to the right by at least two years.
When it comes to reacquiring Spirit, Boeing simply can’t afford to pay cash for the company, which at the close of the stock market yesterday had a market cap of $3.8bn+. Essentially, in our view, it’s the same reason Boeing walked away from the Embraer joint venture in April 2020: it could not afford the $4.5bn cash price tag. (The decision by an arbitrator of whether Boeing’s walk was justified is expected within the coming weeks or months.)
Boeing can’t afford to buy Spirit. We’re not sure Boeing can even afford to acquire Spirit in a stock swap. The money required to bring Spirit into shape is unknown, perhaps even to Boeing.
This is a mess that keeps on giving.
Aircraft production woes stretch far beyond Boeing
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By Judson Rollins
June 17, 2024, ©. Leeham News: Estimating airplane delivery rates isn’t much more than a guessing game nowadays.
While many headlines point fingers at beleaguered Boeing and Spirit AeroSystems, aviation’s production woes are much more complex. Even in 2024, the labor shortage legacy of COVID-19 and raw material shortages exacerbated by the Russia-Ukraine war loom large over the industry.
Airbus struggles to deliver airplanes on time, and engine makers also see their deliveries constrained by supply chain issues.
Source: AFP via Aviation Week Network.
Summary
- Boeing commercial production is far below advertised rates.
- Airbus deliveries suffer from shortages of seats, other parts.
- Embraer says deliveries would be higher without supply chain issues.
- COMAC’s disruption opportunity is dampened by likely trade conflict.
- Pratt and GE Aerospace slowly ramp up delivery of redesigned components.