Leeham News and Analysis
There's more to real news than a news release.
With a month to elections, Embraer bolsters backlog
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Introduction
Sept. 10, 2018, © Leeham News: With the Brazilian elections less than a month away, the outcome of the presidential race will determine whether the proposed joint venture between Embraer and Boeing will be approved.
Embraer is Brazil’s most visible and prestigious international company. The government has a “golden share,” giving it veto power over certain transactions, including the Boeing deal. Boeing will own 80% of the new JV that will be for EMB’s commercial business only. Embraer will own 20%.
The incumbent government says it will approve the joint venture; the opposition party says it will veto the deal.
Summary
Including orders, options and LOIs:
- Production slots are oversold through 2023.
- The skyline quality has some challenges.
- Only three dozen firm orders were announced at Farnborough; the balance has to be firmed up.
Pontifications: Boeing wins certification of KC-46A; B-52 MRO model may be key to profits
By Scott Hamilton
Sept. 10, 2018, © Leeham News: While Boeing Commercial Aircraft grapples with more than four dozen unfinished 737s clogging the space at Renton Airport and Boeing Field, Boeing Defense had some good news last week:
The KC-46A received certification from the US Federal Aviation Administration and the first delivery is due for late October.
Final military certification is still to come and the wing-pod drogues need certifying, but at long last, Boeing can move forward.
Unfinished 737s have peaked, Boeing tells analysts
Sept. 6, 2018, © Leeham News: Boeing officials say the parked inventory of 737s has peaked at around 50 aircraft and should come down slowly as traveled work is performed.
Engineless Boeing 737 at the Renton factory. Photo via WoodysAeroImages.
Officials made the comments yesterday at its annual Investors Day for aerospace analysts.
The first two research notes LNC received last night reflected skepticism by Canaccord Genuity and JP Morgan that Boeing will successfully meet its recovery plan by year end.
As more notes were received today, these analysts generally were more receptive to Boeing’s upbeat message.
Boeing confident of 737 recovery by year-end; some analysts express doubt
Sept. 6, 2018, © Leeham News: As incomplete Boeing 737s fill the ramps, taxiways and other available space at Renton Airport and Boeing Field, company officials sought to assure aerospace analysts there is a recovery plan that will see a full complement of deliveries by year-end.
At least two analysts were unconvinced following the annual Boeing Investors Day yesterday.
Boeing 737 MAX awaiting engines, one of dozens of unfinished airplanes at the Boeing Renton plant. Photo via WoodysAeroImages.
In notes issued by Canaccord Genuity and JP Morgan analysts late Wednesday night Seattle time, Kenneth Herbert and Seth Seifman respectively expressed doubt Boeing will meet its 737 delivery target.
Pontifications: Supply chain melt down to get worse, says manufacturer
By Scott Hamilton
Sept. 3, 2018, © Leeham News: There is more evidence the aerospace supply chain is in meltdown—and it’s going to get worse, a manufacturer tells LNC.
The OEM requested anonymity to speak frankly.
As aerospace analysts gather this week in Seattle for their annual investors day at Boeing, based on the research notes I see, there’s little indication they recognize the magnitude of the evolving problems with the supply chain.
Although the focus recently has been on Boeing and analysts will visit Boeing Wednesday, the issues affect all the OEMs.
I wrote about this 30 days ago. Since then, another Boeing supplier last month acknowledged late deliveries of key parts, reports the Puget Sound Business Journal.
This was followed by a Bloomberg report that Lufthansa Airlines continues to have shortages from Pratt & Whitney for the GTF engines powering the A320neo.
Since then, I’ve had my own additional conversations with the supply chain. The production ramp ups that already have been announced and those being contemplated are in peril and all manufacturers are being affected.
Suppliers chafe at Boeing’s demand for costly certifications
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Introduction
danieljcatchpole(at)gmail(dot)com
September 3, 2018, © Leeham News: Boeing’s insistence that more and more subcontractors meet stringent 
aerospace manufacturing standards risks adding cost and reducing flexibility to the supply chain, several direct and indirect Boeing suppliers tell LNC.
The aerospace giant is requiring more second and third tier suppliers have AS9100 certification. Until recent years, OEMs and their direct suppliers typically were the only companies that formally complied with AS9100.
Subcontractors were expected to conform to the standards, but did not have to formally comply with the requirements. Doing so is expensive and time consuming. Subcontractors’ work was covered by the Tier 1 suppliers’ or Boeing’s AS9100 certification.
The AS9100 standards were adopted in the late 1990s to improve and standardize quality management throughout the increasingly global aerospace industry.
Summary
- Boeing pushing more subcontractors to be AS9100 certified, according to suppliers.
- That risks adding cost and reducing flexibility in supply chain.
- Some suppliers worry it’s a prelude to more cost cutting.
The Muddle of the Market aircraft (No, this isn’t a typo)
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Introduction
Aug. 30, 2018, © Leeham News: As time goes by, the Middle of the Market airplane appears to have 
become the Muddle of the Market.
Boeing can’t seem to close the business case on its Middle of the Market airplane, the New Midmarket Aircraft, or NMA.
And Airbus continues to stir the pot with talk of an A321XLR and the ever-present A321neo Plus.
Summary
- Boeing’s been talking about the MOM for six years—an extraordinarily long time.
- The aircraft evolved from a 757 replacement to a 767 replacement—something the 787 was billed to be.
- The business case remains unclear.
- The Airplane definition is still a matter of debate.
- The MOM was defined by Boeing as above the 737-9 and below the 787-8—but now there’s the 737-10 at the small end, for capacity, and renewed interest in the 787-8 at the upper end.
- Airbus is pushing the A321LR and nearing a decision whether to proceed with the A321XLR.
- Engine makers remain cool to the NMA.
- The supply chain is unenthused about the NMA because Boeing wants to capture the aftermarket and hold the intellectual property rights.
- The supply chain is in melt-down.
Other than this, everything is fine.
Pontifications: Boeing aid to Jet Airways uncommon but not unusual
By Scott Hamilton
Aug. 27, 2018, © Leeham News: Boeing is giving financial help to India’s Jet Airways, according to a news report.
This doesn’t come as a surprise.
Jet Airways has 225 737 MAXes on order (50 direct, the rest listed via lessors). It’s also in what appears to be dire financial straits.
Media reports indicated the airline was possibly going to be out of business in 60 days and it deferred releasing its financial results “indefinitely.” The government is going to probe the airline, according to a press report.
The Boeing aid is not common but it’s not unknown, either.
Pontifications: Workforce shortage hurts entire supply chain
By Scott Hamilton
Aug. 20, 2018, © Leeham News: A growing shortage of workers is exacerbating pressure on suppliers as they struggle to meet current aircraft production rates, even as Airbus and Boeing want to raise them even more.
Add to this the thousands of retirements facing the OEMs in the next 5-10 years, and you can see the strain facing Airbus, Boeing, the engine makers and the suppliers feeding into them.
It also partly explains the shifting trend toward automation. Setting aside the obvious benefits of automation—quality control, accuracy, boring repetitive work, etc—the supply chain in simply facing a growing shortage of workers for which there is no easy answer.
Can an Airbus A321XLR kill NMA’s business case?
By Bjorn Fehrm
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Introduction
August 16, 2018, © Leeham News.: Airbus is working on improving the A321LR so it can fly more of the missions Boeing’s NMA is aimed for, according to Aviation Week. By it, Airbus could ideally make the NMA business case a No-Go.
To understand how much of the NMA market an A321XLR can address we need to understand the limitations of the A321LR and what can be done about them. And how fast such improvements could be implemented.
Summary:
- The A321LR is limited in both Take-Off Weight and fuel capacity to fly further than today’s aircraft.
- How to lift these limitations without imposing large changes is the subject of this week’s article and a follow-up article next week.