Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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Impact to Boeing for MAX grounding assessed
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Introduction
March 19, 2019, © Leeham News: The impact of the grounding of the 737 MAX to Boeing will hurt, but the effect likely will be short term.
The most recent grounding of an airliner was the 2013 grounding of the 787. This cost Boeing an estimated $500m over the course of the three month
grounding. A hardware fix had to be designed to contain battery fires. Installation in the field for 50 aircraft was required. Compensation to operators was necessary.
There are more than 370 MAXes grounded. Norwegian Airlines and Spice Jet already publicly said they will demand compensation. Deliveries are suspended.
This grounding should be much shorter than was the 787.
Summary
- MAX fix was already in the works.
- Some say US government shutdown delayed software fix at least five weeks.
- Implementing software upgrade will be quick.
- Grounding estimated by LNA to be six weeks max.
- MAX grounding cost estimated $550m over several years.
- Short term revenue shift $11bn to later in the year.
Pontifications: 737 MAX events remind of Lockheed Electra story
By Scott Hamilton
March 18, 2019, © Leeham News: There’s a saying that history repeats itself.
When it comes to the crisis of the Boeing 737 MAX, I’m reminded of the crisis Lockheed faced in 1959-1960 when the Electra propjet crashed in September and the following March, killing all aboard both airplanes.
The Electra entered service Jan. 12, 1959, with Eastern Airlines. It was considered a pilot’s airplane. Coming off decades of piston engine aircraft and early in the jet age, the Electra was the only airplane that was over-powered, piston or jet. Timing, however, was poor and crashes soon overtook the euphoria.
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Bjorn’s Corner: The Ethiopian Airline’s Flight 302 crash
By Bjorn Fehrm
March 15, 2019, ©. Leeham News: With the crash in the weekend of Ethiopian Airlines Flight 302 we take a break from the Yaw and Roll stability discussions to look at what happened Sunday.
The 737 MAX 8 with 157 persons onboard crashed six minutes after takeoff. Here is what we know.
Cutting A220 costs is an ‘ongoing exercise’ for Airbus
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Introduction
March 14, 2019, © Leeham News: Airbus’ effort to slash supply costs for A220 production is “an ongoing exercise at this point,” Joe Marcheschi, Airbus’ head of procurement in North America, told LNA in an interview last month.
The A220-300 for JetBlue will be assembled at the Airbus plant in Mobile (AL). Airbus rendering.
“There are no specific, let’s say, achievements yet,” he said. “We are working closely with our supply chain.”
It takes time to squeeze cost out of the supply chain, he said. “We only took over July 1. That’s when we got full knowledge of the existing contracts.”
In January, Philippe Balducchi, head of the Airbus-led venture overseeing production, told journalists that the aerospace giant aims to realize “significant double-digit” percentage cost reduction. He indicated that most of the savings likely would come from the supply chain, according to news reports.
“Look, the airplane is absolutely fantastic—it just costs a lot of money,” Marcheschi said. “Now, we have to find a way to reduce the cost.”
Summary
- Airbus is working to slash supply chain costs on A220 program, but no announcements yet.
- The European plane maker wants to offer commercial MRO services in North America.
Commentary: Boeing’s Tylenol moment and the need for radical transparency
By Judson Rollins
March 13, 2019, © Leeham News: The traveling public’s faith in Boeing – and that of regulators in dozens of countries – has clearly taken a beating.
The 737 MAX has now been grounded or banned in nearly every jurisdiction in which it was operating just a few days ago.
Sunday’s tragic accident in Ethiopia bears an uncanny resemblance to the circumstances of the October crash of Lion Air 610, a fact which Boeing has tried 
to downplay by arguing that both accidents are still under investigation. The earlier accident is widely believed to have been caused by repeated nose-down trim responses driven by the MAX’s Maneuvering Characteristics Augmentation System (MCAS), which in turn may have been influenced by inputs from a faulty angle-of-attack (AOA) sensor.
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EASA grounds, bans 737 MAX; FAA remains silent
March 12, 2019, (c) Leeham News: EASA, the European air safety regulator, grounded the Boeing 737-8/9 operated by EU airlines and banned operation of the airplanes operated by third-party airlines/countries.
The press release is here.
The US Federal Aviation Administration still is silent about grounding the airplanes in the US.
UK bans MAX; China checked with Boeing, FAA before grounding
March 12, 2019, © Leeham News: Australia and the United Kingdom today joined a growing list of countries banning the Boeing 737 MAX from operating in or through their 
airspace.
The UK’s decision to ban the MAX is, up to now, the most important development in the growing crisis of confidence in the safety of the MAX.
The UK and continental Europe’s regulators, EASA, are considered tough regulators who usually work in concert with the USA’s Federal Aviation Administration. That the UK authority is now ahead of the FAA is crucial. If EASA follows suit, the blow to the FAA and to Boeing will be huge.
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About 40% of MAX fleet now grounded-but not by FAA
March 12, 2019, © Leeham News: About 40% of the world’s in-service Boeing 737 MAX fleet were grounded by the end of yesterday, Seattle time, after more governments and airlines banned operations.
Singapore was the latest to ban MAX operations from its air space.
The US Federal Aviation Administration said yesterday there isn’t enough information yet from the Ethiopian Airlines crash Sunday to conclude a grounding order is necessary.
But it added that it will issue an order for a mandatory action by April to make improvements to the flight control system. Boeing late Monday confirmed a software upgrade is in the works for its MCAS stall recovery system used on the MAX.
LNA reported early Monday that a plan to implement a software upgrade following the October crash of a Lion Air MAX 8 had not been implemented.
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Indonesia grounds MAX, one-third of world fleet now grounded
Update: Royal Air Maroc, Mongolian Airlines ground MAX.
March 11, 2019, © Leeham News: Indonesia regulators today joined China, Grand Cayman Airways and Ethiopian Airlines in grounding the Boeing 737 MAX pending investigations or inspections.
This means about one third of the in-service MAXes have been grounded by regulators or operators.
The moves came within 36 hours of the crash of Ethiopian Flight 302, a MAX 8, six minutes after take off from Addis Ababa. The crash killed all 157 people on board five months after a Lion Air 737-8 crash that killed 189 passengers and crew. Lion Air is an Indonesian carrier. The airline’s JT610 crashed 12 minutes after take off.
Digital transformation critical to Boeing
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Introduction
March 11, 2019, © Leeham News: Digital transformation is critical to Boeing’s evolving business model. But suppliers are in no rush to hand over their data to Boeing.
For more than a year, the airplane maker has been moving toward a new system for managing inventory and parts. As LNA noted last year, Boeing Commercial Airplanes’ management expects the new system, known as SAP, will streamline parts delivery and cut costs for Boeing and suppliers. BCA has been pushing suppliers for more transparency of their own supply chains and production flows. It likely would not surprise many industry watchers if BCA moves to integrate its suppliers into SAP in some fashion down the road.
Managers and executives at several suppliers told LNA that they expect Boeing to push for greater access to their companies’ internal data in coming years. They expressed ambivalence between potential efficiency gains and loss of autonomy.