Leeham News and Analysis
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Leeham News and Analysis
- Boeing wants to remarket China’s airplanes. It’s costly and time consuming. April 28, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 19. April 25, 2025
- How good is the C929? Part 2. April 24, 2025
- Boeing First Quarter Results Update: China is 10% of the backlog, with 500 in “Unidentified” April 24, 2025
- Boeing First Quarter Results: Tariffs, Return flights, $10.55bn asset sale April 23, 2025
Boeing lays ground to cut 777 rates again
Greg Smith, CFO of The Boeing Co.
Aug. 11, 2016, © Leeham Co.: Boeing is laying the groundwork to further reduce the production rate on the 777 Classic and scrap a planned rate increase for the 787 from 12 to 14/mo.
Greg Smith, CFO of The Boeing Co., reiterated a message from CEO Dennis Muilenburg during the 2Q2016 earnings call that these rate adjustments may be forthcoming.
Smith made his remarks at an investors day conference sponsored by Jefferies & Co.
Boeing slightly leads Airbus in YTD orders
Aug. 8, 2016, © Leeham Co.: Boeing continues to lead Airbus in the race for orders post-Farnborough Air Show (FIA), but there are key orders announced there that haven’t been booked on the two OEMs order books.
Boeing hasn’t booked most of the firm orders yet from Volga Dnepr/Air Bridge Cargo announced at the show for 747-8Fs. Airbus hasn’t booked the 100 announced orders for A320s from AirAsia. Boeing also announced some 737 MAX orders that need to be firmed up into contracts before booking to its website.
The AirBridge orders will be closely watched. Boeing said at Farnborough that the MOU for 20 747-8Fs announced at the Paris Air Show a year earlier were now a firm contract, over six years. But Boeing and AirBridge did not say how many were firm orders, other than to identify four aircraft that were previously delivered under leases as part of the 20.
Reuters believes that 13 of the 20 are firm. Those four previous deliveries appear to be part of the 13, but this is unclear. Airfinance Journal reported that seven of the 20 will be taken by Boeing Capital Corp and leased to AirBridge. If true, this adds about $1bn to the Boeing balance sheet for customer financing.
This detail is important because AirBridge is very possibly the last customer that will order the 747-8. Boeing said it now has a backlog to 2019, but because the Airbridge transaction remains murky at best, the details are equally murky.
Drilling down into details of the orders placed through July:
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Pontifications: Twelve new designs in 10 years spurred orders
By Scott Hamilton
Aug. 8, 2016, © Leeham Co.: The book:bill for Airbus and Boeing this year will be hard-pressed to reach one. Airbus has a better shot, given lower production rates. But the recent years of record-setting orders are over for now.
Unlike some, this doesn’t represent a bursting bubble to LNC. Rather, it’s a natural progression of the cycles that are historically seen.
It’s necessary to put some context into the recent years of these unprecedented number of orders.
State officials need to act now, ahead of lean times coming at Boeing Everett
August 4, 2016 (c) Leeham Co.: With the news that Boeing may terminate the 747-8 program, effective around 2019 when the current backlog expires, the obvious
Washington Gov. Jay Inslee (D) is running for reelection. He needs to think about the coming lean times at the Boeing Everett plant in less than three years. So does his challenger and all the incumbents and candidates for Legislature. USA today photo via Google images.
question arises: what happens to the assembly line space now occupied by the massive airplane?
Given that the State of Washington elected and appointed officials generally view Boeing in a reactive rather than a proactive mode, an open letter to them seems appropriate.
It’s imperative that Washington officials begin planning now for some lean times ahead for the Everett plant. Waiting until 2019 is too little, too late.
Irkut MC-21-300 analysis, Part 3
By Bjorn Fehrm
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Introduction
August04, 2016, ©. Leeham Co: With the classification of the Irkut MC-21-300 done in terms of its size segment (it’s close to the Boeing 737 MAX 9 in size) and the key data of the aircraft analyzed, it’s now time to look at aircraft efficiency and payload-range performance.
Figure 1. MC-21-300 prototype on the final assembly line. Source: Irkut
We will do this with two cabin configurations for the aircraft. The first will be the nominal two class seating as proposed by the OEMs. For the second, we use a single class layout with 30-inch seat pitch.
Summary:
- The MC-21 has problems to compete with the re-engined 737 MAX 9 in terms of efficiency when using the standard two class cabins.
- When we switch to a single class high density layout, the fuel efficiency improves. The MC-21-300 exit concept is then more similar to the MAX 9, which affects efficiency in a positive way.
Boeing’s 2Q2016 results and the 787
By Bjorn Fehrm
August 03, 2016, ©. Leeham Co: Boeing released its 2Q 2016 results last week. This is always a good opportunity to look at information regarding its 787 Dreamliner project. Last week’s call did not disappoint even if the information leaves plenty of room for interpretation.
The first information was the production cost of the fourth and fifth Dreamliner that were produced. According to the stock market filing (10-Q), these cost over $500m per unit. The further information we got was the production cost for the 38 Dreamliners that were produced in the quarter and the relationship of the 787-8 costs to the 787-9.
As Boeing uses program accounting, these normally very hush-hush figures have to be shared with the public. Not so with other aircraft OEMs that use unit accounting for production. Read more
Boeing 787: Stable Rate, Hike Rate or Cut Rate
Aug. 2, 2016, © Leeham Co.: Boeing officials increasingly downplay the prospect of the 787 production rate increasing to 14/mo by the end of the decade from the current 12/mo, reflecting uncertainty over the strength of the wide-body market in the near-to-medium term.
Dennis Muilenburg, CEO of The Boeing Co., said during the company’s 2Q2016 earnings call July 27 that “we haven’t pinned down a specific decision point [on ramping up to 14/mo] yet because we’re going to keep a close eye on the market. The signals from our customers, we’ve got time to do our due diligence here.
Figure 1. Boeing 787 Orders and Deliveries. Click on image to enlarge.
“Our principle here is to keep wide body supply and demand in balance. And we’re confident in the 787 program across that span of scenarios, and we’re going to continue to work campaigns to fill out to the 14 a month rate step-up, and we’ll evaluate timelines and decisions around that. But you can be very confident that whatever we decide, we’re going to keep supply and demand in balance. We’re going to do it efficiently and productively, and all of this again is enveloped by our expectation of a year-over-year cash growth business.”
Boeing noted that the program is sold out in 2018 and has some slots available in 2019. At rate 12, the likelihood of these slots being filled may be challenging. Although the number itself isn’t great—27, according to Ascend—finding enough customers for delivery in 2019 could be challenging in the current soft environment, and with competition from a much lower priced Airbus A330, whether a CEO or NEO. The challenge becomes greater the farther out in the future.
If Boeing went to rate 14, this is another 24 airplanes per year that have to be sold. (Figure 1.)
Pontifications: A321LR actions put pressure on Boeing to launch 737-10
By Scott Hamilton
Aug. 1, 2016, © Leeham Co.: The order last week by JetBlue for 15 Airbus A321neos, with the option to convert these to A321LRs for potential trans-Atlantic service, comes within two weeks of Norwegian Air Shuttle converting orders for 30 A321neos to A321LRs. NAS is going to use the LRs for trans-Atlantic service.
We’re aware of at least two more campaigns for A321LRs with carriers that would use them for trans-Atlantic operations. There are undoubtedly more.
The A321LR is an option, allowing airlines that have already ordered the 321neo to switch before construction of the planes begins. The LR EIS is 2019.
To date, Air Lease Corp, TAP and NAS have ordered the LR. Astana is taking the LR on lease from ALC. The JetBlue and NAS deals up the pressure on Boeing to make decisions on whether to launch the stretch of the 737-9 MAX, to what’s commonly called the 737-10; and whether to launch the New Mid-Range Airplane (NMA) for the Middle of the Market (MOM) sector.
The NAS announcement is significant. NAS has a large order for the 737 MAX and A320neo families. The original intent was to use the MAX on longer routes and the A320neo on shorter routes. NAS is also acting as a lessor and leasing out the A320neo family. Now, with the selection of the A321LR, this is another airline that chose the A321LR over the MAX 9.
Irkut MC-21; we look at the MC-21-300, Part 2.
By Bjorn Fehrm
Subscription required.
Introduction
August 01, 2016, ©. Leeham Co: After having found the nearest competitor to the Irkut MC-21-300 as the Boeing 737 MAX 9 in our first article, we now go deeper in the comparison of the two aircraft.
Figure 1. MC-21-300 at the roll out in June 2016. Source: Irkut
In the first article, we found that the aircraft have almost identical cabin dimensions. Now we will look at other areas like airframe dimensions, weights and data which dictate overall performance.
Summary:
- The MC-21 has cabin dimensions which are very close to the 737 MAX 9.
- The nominal two class seating by Irkut is lower than the MAX 9. We have assumed that this will increase during the lifetime of the MC-21.
- We also compare other data between the MC-21-300 and the MAX 9, such as weights, wetted areas and effective wingspans to see if these are similar as well. In the end these dictate the aircraft’s efficiency together with the engines.
Air Lease sounds caution note for Airbus, Boeing
Air Lease Corp. made the predictions on its 2Q2016 earnings call Friday.
ALC also predicted Boeing will further lower the production rate of the 777 Classic from the announced 5.5/mo in 2018. ALC did not specify a rate, but some aerospace analysts believe a rate of 4/mo is coming.
They also believe neither Boeing nor Airbus will increase production rates of the 737 to 57/mo or A320s to 60/mo. Boeing announced previously that it is considering increasing the 737 rate from the announced 52/mo, effective 2018, to 57/mo. Airbus previously announced it will increase the production rate of the A320 to 60/mo and is considering a rate of 63/mo.
Airbus is bringing the rate up from 44/mo to 60 by 2018.
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Posted on August 10, 2016 by Scott Hamilton
Airbus, Boeing, Leeham News and Comment
737, 777 Classic, 787, A320, Air Lease Corp., Airbus, Boeing, John Plueger