Leeham News and Analysis
There's more to real news than a news release.
Two analysts, two very different views of Boeing free cash flow
Sept. 13, 2016: Two aerospace analysts took a look at Boeing’s free cash flow estimates for the next five years and came away with very different conclusions.
Cai von Ruhmor of Cowen & Co. believes the 787, 737 MAX and KC-46A programs will more than offset declines in the 777 Classic cash flow and increased spending on its successor, the 777X. Von Rohmor maintains an Outperform (Buy) rating on the stock.
David Strauss of UBS looks at the data and concludes the FCF will decline, most notably as the 777X cash outflow ramps up ahead of deliveries in 2020. Strauss has a Neutral (Hold) on the stock.
Boeing’s transition to more automation
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Introduction
Robots drill holes for fasteners. Boeing photo via Google images.
Sept. 12, 2016, © Leeham News: Boeing is on a transition to improve manufacturing efficiency that will take years to complete.
Dominic Gates of The Seattle Times Sunday provided a detailed comparison between the Airbus wing production plant in Broughton, Wales, and Boeing’s 777X wing production plant in Everett (WA).
The Broughton facility is a unit of ElectroImpact of Mukilteo (WA), next to Everett’s Paine Field, where all of Boeing’s wide-body assembly is done. ElectroImpact also is a supplier to Boeing.
Boeing is also adding robotics to the 777 Classic assembly process, from wing-painting to riveting. The latter has some glitches, Gates recently reported. Boeing officials blame delays and traveled work on a three-month strike by supplier Triumph Group. The robotics on the Classic are getting their baptism in advance of becoming the principal method of assembly on the new 777X, which begins in 2018.
Finally, or perhaps not, Boeing began a transition to more automation with the assembly of the 737 MAX. A dedicated, third assembly line was created for the MAX that includes more efficiencies.
Summary
- Boeing, which began shifting to Lean Production and Six Sigma principals a decade or more ago, has made great strides.
- But integrating advanced, automated assembly into mature programs in old factories has its disadvantages to “greenfield” sites and new airplane programs.
- Opportunities to make great leaps forward come with the prospective Middle of the Market airplane and the replacement for the 737.
Pontifications: “Sully” sullies NTSB
By Scott Hamilton
Sept. 12, 2016, © Leeham Co.: Sully, the movie about the miracle of the successful water landing of US Airways 1549 on the Hudson River in New York City, sullies the National Transportation Safety Board.
Apparently not content with the gripping drama of the flight’s emergency itself and the dramatic rescue of all 155 souls on board, the movie gins up an NTSB out to hang Capt. Chesley Sullenberger (Sully) and co-pilot Jeffrey Skiles.
Russian-Chinese wide-body; The aircraft Part 3
By Bjorn Fehrm
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Introduction
September 08, 2016, ©. Leeham Co: Having covered the possibilities of reusing parts of the Il-96 fuselage for a new Russian-Chinese wide-body, it’s now time to look at the existing IL-96 wing and how far this is from a modern design.
Figure 1. Concept for new wide-body airliner. Source: United Aircraft.
The intent is not to propose that the existing wing is reused but rather to check the technology level against western designs and how big a leap it will be for the partners to make a modern high performance wing for the aircraft.
Summary:
- The IL-96 wing is roughly on the technological level of the Airbus A340-300 wing with a bit lower aspect ratio.
- The dimensions are close to what is needed for the new wide-body but sweep and aspect ratio needs to be changed for a new wing.
- A wing for a 2025 long range wide-body also need a more modern construction technology than classical aluminum alloys.
Weekly analysts report: Reaction to CSeries delivery delays
Bombardier CSeries: new delivery delays, but this time not BBD’s fault. Photo via Google images.
Sept. 7, 2016: The news that Bombardier is halving its projected deliveries of the CSeries this year because of engine delays from Pratt & Whitney drew commentary from a couple of the analysts whose reports LNC receives.
- Cutting the anticipated deliveries for the Bombardier CSeries was not a surprise to Credit Suisse, but the reason (PW GTF delays) was.
- Goldman Sachs pretty much yawned at BBD’s news.
- Bernstein Research takes another of its periodic looks at the Airbus v Boeing competition, this time for narrow-bodies.
- The sale of CIT Aerospace, one of the world’s largest lessors (and with sizeable orders from Airbus and Boeing), will likely go to a Chinese firm, predicts FBR & Co.. FBR focuses on the lessor industry.
Pontifications: Odds and Ends to end the summer
By Scott Hamilton
Sept. 5, 2016, © Leeham Co.: August was unusually slow, so today is sort of an Odds and Ends clean-up of the summer.
There was the Southwest Airlines engine incident and the reports that ANA’s Boeing 787s have engine issues, but I wrote about these last week.
Today, the Odds and Ends include more on the Mitsubishi MRJ; Airbus deliveries; sales campaigns and other stuff.
New value Guide: A look at A320, 737
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Introduction
Sept. 5, 2016, © Leeham Co.: The semi-annual update to The Guide, from appraiser Aviation Specialists of Herndon (VA), indicates Airbus and Boeing single-aisle aircraft remain hotly competitive in current market values and future residual values.
The Guide covers all in-production jets from Airbus, Boeing (including McDonnell Douglas), Bombardier and Embraer, plus their out-of-production airplanes. Passenger and freighters, including some P2F conversions, are included. BBD’s CS300 is included, although it doesn’t enter service for another few months.
The Guide is a for-purchase product.
Summary
- The A321ceo, sans sharklets, has a higher current market value than its competitor, the 737-900ER. It also has higher residual value forecast based on the higher Current Market Value starting point, but as a percentage of the starting point, the two airplanes are the same.
- The 737-800W has a better CMV and as a result a better residual value forecast. But it also has a fractionally higher RV as a percentage of the starting point.
Bjorn’s Corner: Aeronautical greats
By Bjorn Fehrm
September02, 2016, ©. Leeham Co: One of our aeronautical greats, Joe Sutter, left us this week. He’s one of the characters in aeronautics that I admire for his capability to find what is the right thing to do, take the tough decision and fight it through.
Figure 1. Early concepts for Boeing 747. Source: Goggle images.
Sutter was the chief engineer for the Boeing 747 project that found that the original idea of stacking two 707s on top of each other, Figure 1, was wrong and instead took the long route to explain what was the right way to go, dual aisle and 10 abreast. Read more
Southwest pilot contract good news for Boeing
Sept. 1, 2016, © Leeham Co.: The lucrative labor contract agreement for Southwest Airlines pilots agreed this week is good news for Boeing.
Why?
Because under the previous contract, Southwest pilots—who had been in negotiations with management for about four years—claimed they didn’t have to fly the new
Boeing 737-7 MAX. Southwest Airlines is the launch operator of the 737-8 MAX. Boeing photo via Google images.
737 MAX. The terms limited the number of types of 737s that could be flown, they claimed.
Management took a different view, but the issue was serious enough that WN accelerated retiring 737 Classics in part because of this issue. Retire the Classics, and a fleet type is eliminated, paving the way to accept and operate the MAX.
Russian-Chinese wide-body: The aircraft, Part 2
By Bjorn Fehrm
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Introduction
September 01, 2016, ©. Leeham Co: In Part 1, we concluded that the existing Il-96 fuselage cross section would be suitable for a new Russian-Chinese wide-body. This means that a lot of experience and existing designs for fuselage sections can be re-used.
Figure 1. Concept for new wide-body airliner. Source: United Aircraft.
Most importantly, it means that mock-ups and cabin sections can be made early in the project to start work on new and better cabin equipment. This is an area where the partners really lag their western competitors.
We will now look at what aircraft capacities can be conceived with the existing Il-96-300 and -400 fuselages and what changes will be necessary to achieve the targeted sizes that Russia’s United Aircraft Corporation (UAC) and Commercial Aircraft Corporation of China (COMAC) have communicated.
Summary:
- The IL-96 fuselage can be re-used for a Russian-Chinese wide-body.
- The existing IL96-300 cabin is on the small side whereas the Il-96-400 cabin is a bit larger than needed.
- The project will likely choose an intermediate size fuselage to reach the targeted 250 to 280 passenger capacity.