Leeham News and Analysis
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Leeham News and Analysis
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Bjorn’s Corner: Efficient systems, Part 2
By Bjorn Fehrm
12 February 2016, ©. Leeham Co: Last week we looked at what could be done to the aircraft’s systems to increase the aircraft’s efficiency. But it does not stop with systems which can improve the aircrafts internal efficiency. Modern avionics and flight procedures can improve the efficiency of an airliner’s flight operation.
Ever since the Second World War, the navigation of civil airliners has been done by flying straight leg routes with the help of special ground-based radio beacons. The most elementary of these is the Non-Directional Beacon, NDB. It requires the pilot to read bearings to the beacon and is difficult to use.
A directional beacon called VOR, that went operational after WW2, changed the way that airliners could navigate (over large un-inhabited areas like the Atlantic or the Oceans, different low precision wide area navigation systems were used like LORAN). While the VOR was a big step forward, it still required navigation in straight leg routes between VORs, and this was not 100% efficient.
The development of powerful navigation computers (FMS) and the use of GPS is now changing this.
PNAA Day 3: Boeing bought $40bn of stuff from suppliers in 2015
Feb. 11, 2016, © Leeham Co. “We bought more than $40bn worth of stuff from suppliers last year. We delivered 762 airplanes last year and we could not have done that without the suppliers.
- Feb. 11, 2016: Today is the last of three days of conference meetings organized by
the Pacific Northwest Aerospace Alliance (PNAA), in Lynnwood (WA). We’ve provided live reporting throughout the three days.
“We’re going through a shift…and through a global dogfight,” Kent Fisher, VP-GM of Supplier Management or Boeing, told the Pacific Northwest Aerospace Alliance (PNAA) conference today.
PNAA Day 2: Airbus says Boeing has product gap.
Feb. 10, 2016 © Leeham Co. Boeing has a product gap that Airbus is filling with its airplanes, says Simon Pickup, strategic marketing director.
Pickup said Boeing has a gap in its product line between the 737-8 and the 787-9. The 737-9 and 787-8 aren’t selling, creating a hole in the market for Boeing that is filled by Airbus.
Feb. 10, 2016: Today is the second of three days of conference meetings organized by 
the Pacific Northwest Aerospace Alliance (PNAA), in Lynnwood (WA). We’re providing live reporting throughout the three days.
The A321 and the smaller A330 fill this gap, says Pickup, who noted the A321neo outsold the 737-9 by 9:1 in the last two years and the A330-200/800 dramatically outsold the 787-8 during the same period.
PNAA Day 2: Cautionary note raised
- Feb. 10, 2016: Today is the second of three days of conference meetings organized by the Pacific Northwest Aerospace Alliance (PNAA), in Lynnwood (WA). We’re providing live reporting throughout the three days.
Feb. 10, 2016: Large commercial aircraft deliveries hit just under $104bn in 2015, a 4.9% gain over 2014. Regional aircraft values, however, were just $7.1bn, a decline of 10.5% year-over-year, said Richard Aboulafia, a consultant with the Teal Group.
Deliveries of all aircraft types, including military, rotocraft, etc., saw only a 0.6% increase YOY. Jetliners account for 60% of the total values.
PNAA Day 1: Boeing’s view of the global market
- Feb. 9, 2016: Today is the first of three days of conference meetings organized by the Pacific Northwest Aerospace Alliance (PNAA), in Lynnwood (WA). We’re providing live reporting throughout the three days.
Randy Tinseth, VP-Marketing for Boeing, said forecasts predict oil as low as $7/bbl and as high as $80/bbl–as always, “giving themselves a lot of leeway.”
Asia remains the top growth market, adding 100m passengers every year (the size of Atlanta’s international airport, the world’s busiest, which served 100m passengers lasgt year.
The cargo market has been challenged over the last six years, and it comes and goes, but it will come back when trade comes back, Tinseth said.
- Tinseth compared the 787-10 with the A330-900 to show a claimed 165nm range advantage–but the A350-900 (new generation-to-new generation) was omitted. The A350-900 has a much longer range than the 787-10. (Updated to correct the A330-800 to the A330-900.)
The single-aisle market represents 70% of the market and half the value, including Airbus and all other competitors.
“We as an industry and we as a company have to focus on doing the right things…and build at the right cost” to be successful, Tinseth said.
He said that given the total forecast of 35,000 airplanes from regional jet to Very Large Aircraft, there is a need for 60% of the sales still to be made.
Tinseth said the company will deliver fewer 737s this year because the supply chain can’t keep up as the transition between the NG and MAX takes place.
Update: This email was received later from Boeing’s Corporate Communications department:
I wanted to touch base on this bullet in your coverage of Randy’s PNAA presentation.
After talking to Randy, I believe his response was lost in translation.
He was making the point that the transition to MAX is the reason we’ll deliver fewer 737s—because we’re producing several MAX airplanes this year that won’t deliver until 2017.
On a follow up question about separate production lines, he was simply making the point that the NG and MAX share a common supply chain.
So the supply chain is delivering precisely to our 42 per month rate. We’re producing 42 per month, but won’t be able to deliver to that rate this year due to MAX certification.
His point was the opposite of “can’t keep up.” Our suppliers are doing exactly what we need them to do. We can’t expect them to deliver at a rate higher than 42 right now just so we can build more NGs to make up for the MAXs that won’t deliver this year. And of course, that would go against our own rate hike schedule.
China’s market has slowed, but the government is restructuring the economy but “we see robust, double-digit growth” for the future, he said.
Despite the fluctuation of oil prices, “we haven’t seen a change in the replacement pattern,” Tinseth said. Aircraft reach maintenance requirements, interior upgrades and certain ages that simply need replacement.
PNAA Conference Day 1: Aerospace Clusters
- Feb. 9, 2016: Today is the first of three days of conference meetings organized by the Pacific Northwest Aerospace Alliance (PNAA), in Lynnwood (WA). We’re providing live reporting throughout the three days.
Aerospace clusters are evolving throughout the world, said Kevin Michael, vice president of ICF International.
California is on the decline. Two new clusters on the rise are Mexico and the Southeastern US. The Netherlands and Singapore are successful, long-term clusters.
California was the premier aerospace cluster for decades, but its demise began when Lockheed chose Georgia as the location to build the C-130. The founding of Airbus was not good news for SoCal, and neither was the end of the Cold War. The acquisition of McDonnell Douglas by Boeing in 1997 further precipitated the decline of SoCal.
Pontifications: Dissecting Boeing’s 2016 delivery guidance
By Scott Hamilton
Feb. 8, 2016, © Leeham Co.: Boeing’s surprise guidance for 2016 for fewer deliveries on the 737 and 767 lines raised as many questions as officials answered on the Jan. 27 earnings call.
The lower guidance led to about a 9% drop in stock, from $128 to $115. As of Friday, the stock had recovered some, trading in the low $120s.
Boeing’s explanation about the lower guidance for 737 deliveries—12 fewer this year than in 2015—seemed, on the surface, reasonable. As the 737 MAX entered production, both with test aircraft and the first production airplanes, officials said this will lead to fewer deliveries of the NG.
But as stock analysts digested the information, skepticism arose. David Strauss of UBS issued a note last week in which he concluded the real reason for the lower deliveries is a likely production gap—not enough NG sales were achieved to bridge the gap from the NG to the MAX.
Bjorn’s Corner: Efficient systems
By Bjorn Fehrm
05 February 2016, © Leeham Co: In recent Corners, we looked into technologies which have made the new breed of airliners more efficient.
We’ve talked about how new engines can raise efficiency by about 15% and how aerodynamic improvements, like more efficient split winglets, can add another 1%-2% over single blade winglets. We have also looked into modern ways to manufacture the more resilient and lighter composites structures that designers want to use to increase aircraft efficiency.
There is one area which we have not covered: the aircraft’s systems and how these can be made more efficient. An improved system architecture can add the efficiency improvement of a split winglet. So let’s have a look at the trends in aircraft systems.
We start this week with power distribution.
Can the 787 pay its debts?
By Bjorn Fehrm
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Introduction
04 February, 2015, © Leeham Co: Boeing has presented its results for the last quarter of 2015. It was a quarter for Boeing with solid performance in revenue ($96.1bn) and in cash generation ($9.4bn).
Despite that, Wall Street was not pleased. The 747-8 program is not selling well and the upcoming production bridges for 737NG to 737 MAX and 777 to 777X are no longer to be ignored.
The results presentation is also our chance to check our analysis around the 787 program; will it be able to pay its debts within the forecasted period by Boeing (in the program accounting block of 1,300 units)?
Summary:
- Boeing reports deferred costs in line with or slightly better than expectations. We decode what this means for the deferral curve for the 787 and from which parts of the 787 program the improvements came.
- Smith also gave new information regarding learning effects for 787-8 and 787-9 and when the 787 goes cash positive. We check if this changes any of our assumptions for our forecast for the program. Read more
Dissecting Boeing cost-cutting
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Introduction
Feb. 11, 2016, © Leeham Co. The news yesterday that Boeing is undertaking a new round
of cost-cutting has been buzzing around management and labor circles for months.
LNC last year began hearing management at Boeing Commercial Airplanes would likely face personnel cuts of 10% to 15%. Cuts were expected within the marketing/sales departments, in part due to struggling sales of the 7-Series airplanes, sources told LNC.
The leading labor unions, SPEEA (engineers) and IAM 751 (touch labor), each told LNC last year they expected workforce layoffs were in the future.
More ominously, a consultant who occasionally worked with Boeing, told LNC that the elevation of Dennis Muilenburg from president and chief operating office to president and CEO (and, eventually, chairman) would make former CEO Jim McNerney’s cost- cutting efforts pale by comparison.
Summary
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Posted on February 11, 2016 by Scott Hamilton
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