Leeham News and Analysis
There's more to real news than a news release.
Boeing’s safety, labor battles heat up while CEO will walk with $34m payout
By Scott Hamilton
May 16, 2024, © Leeham News: Even as Boeing is under fire for safety issues, the company’s battles heat up.
- Boeing remains at an impasse with its engineers and technicians union over creating a new safety program. The company has doubled down, the union says. SPEEA has turned to lawyers for legal advice.
- The US Department of Justice on Tuesday notified Boeing that it concluded the company failed to live up to terms of a 2021 Deferred Prosecution Agreement (DPA) intended to put to rest all criminal liabilities stemming from the 2018-19 737 MAX crashes that killed 346 people. DOJ may go ahead with criminal prosecutions now.
- The firefighters union was locked out by Boeing over contract negotiations, bringing in replacement workers. The union says Boeing’s actions threaten safety at its plants. SPEEA and its powerful touch labor union, the IAM 751, are picketing with the firefighters in support.
- IAM 751 apparently is using the firefighters’ strike as a training ground in anticipation of its own possible strike in September when its current contract expires.
A350-1000 or 777-8? Part 2
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By Bjorn Fehrm
May 16, 2024, © Leeham News: We are doing an article series comparing the capabilities of the Airbus A350-1000 and the Boeing 777X. We have looked at the A350-1000 versus the 777-9 and started comparing the history and capabilities of the 777-8 versus the A350-1000 last week.
Now, we use our Aircraft Performance and Cost Model (APCM) to fly the aircraft on a typical route and compare their performance.
Summary:
- The A350-1000 and the latest 777-8 definition is a closer payload-range match than the A350-1000 and 777-9.
- Passenger and cargo capabilities are similar. The economic comparison will be determined by maintenance costs for the engines.
Airbus’ A350-1000 or Boeing’s 777-8? Part 1
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By Bjorn Fehrm
May 9, 2024, © Leeham News: We are doing an article series comparing the capabilities of the Airbus A350-1000 and the Boeing 777X series. We started with the 777-9, the larger model. Now, we continue with the shorter 777-8, an aircraft closer in size to the A350-1000.
The 777-8 was originally launched in a shorter version together with the 777-9. Then, it went very quiet around the 777-8, with some analysts speculating that the passenger version would not be done. The 777X freighter, the 777-8F, was launched in January 2022. It became a bit longer than the 777-8. This now forms the final definition of the 777-8.
Summary:
- The comparison of the A350-1000 and the 777-8 is comparing the longer-narrower versus the shorter-wider.
- Which is the best? We use Leeham’s Aircraft Performance and Cost Model (APCM) to find out.
Southwest could solve its MAX 7 woes … by buying Breeze?
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By Judson Rollins
Introduction
May 6, 2024, © Leeham News: Southwest Airlines, still awaiting the certification and delivery of the Boeing 737 MAX 7 as a replacement for its aging 737-700s, might have an unorthodox alternative: acquire startup Breeze Airways for its Airbus A220 fleet – and, more importantly, its order book.
Source: Orlando International Airport via Simple Flying.
Launched in 2021 by serial airline entrepreneur David Neeleman, Breeze operates 23 A220-300s, 10 Embraer E190s, and six E195s to 47 airports across the US. It focuses on connecting larger airports to smaller cities, including a handful of transcontinental routes.
Ironically, the Utah-based airline achieved its first-ever monthly operating profit in March. It recently announced plans to operate the A220 exclusively by the end of this year.
According to a January update from database provider Cirium, Breeze has between 11 and 13 A220s scheduled for delivery each year through 2028. No options are listed.
Market intelligence says Airbus Commercial Aircraft CEO Christian Scherer visited with Southwest executives in Dallas and Breeze leadership near Salt Lake City in mid-April. This was well after Breeze’s February order for 10 additional A220s.
Summary
- To deliver or not to deliver the MAX 7?
- Southwest’s aging 737-700 fleet has few replacement options
- How a Breeze acquisition might play out
- Azorra Aviation is likely a key partner in helping Southwest get A220s
A350-1000 or 777-9? Part 4
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By Bjorn Fehrm
May 2, 2024, © Leeham News: We are doing an article series comparing the capabilities of the Airbus A350-1000 and the Boeing 777-9. We looked at the development history of the aircraft and then their capability and fuel economics.
We could see that the 777-9 is trailing the A350-1000 in payload range, partly because we compare the base version of the 777-9 with a further developed A350-1000. Now, we investigate what the 777-9 performance would be should we include a typical future development of the Maximum TakeOff Weight (MTOW).
Summary:
- The A350-1000 has a clear payload-range advantage over the standard 777-9.
- With an in-service Maximum TakeOff Weight (MTOW) development like the A350-1000, the difference is reduced.
Pontifications: Tombstone mentalities and Fantasy Land
By Scott Hamilton
Analysis
By Scott Hamilton
April 30, 2024, © Leeham News: David Calhoun, the CEO of The Boeing Co., put this right at the top of an employee message and the 1Q2024 earnings call last Wednesday:
“Since Jan. 5, more than 70,000 of you have participated in Quality Stand Downs across more than a dozen Boeing sites. From those, we’ve received more than 30,000 ideas on how we can improve. And this year, we’ve seen more than a 500% increase in employee Speak Up submissions compared to 2023. We are taking all ideas collected and prioritizing them as we further enhance our factory disciplines and overall quality standards. Our people know better than anyone the actions we must take to improve, and we are listening and acting on their feedback.”
It’s obviously a statement intended to assure everyone interested in Boeing that it’s taking positive steps to increase safety protocol and listen to employees.
I had two reactions.
First: Why was this necessary? Supposedly after the 2018-19 737 MA X crisis, Boeing upped its safety protocols, its employee Speak Up program, and it was forced into a new relationship with the Federal Aviation Administration (FAA).
The Jan. 5, 2024, accident involving Alaska Airlines flight 1282 made it crystal clear that the post-2019 MAX crisis changes were largely window dressing.
Second: Reading Calhoun’s statement reminded me of a long-held axiom in commercial aviation of what’s derisively called the Tombstone mentality. This is tied to the belief that the FAA doesn’t take drastic safety action until after someone dies in an accident.
Unfortunately, recent history renders this parallel to The Boeing Co.
Sadly, failure to assure safety is indeed Boeing’s No. 1 priority will go down as David Calhoun’s legacy as CEO of The Boeing Co.
Related articles:
- SPEEA, Boeing at impasses over safety proposal
- Boeing unlikely to meet the FAA’s 90-day deadline on safety plan
- Boeing defends against whistleblower allegations
- Boeing must meet FAA quality plan before raising production rates (Reuters)
Boeing Financial Analysis – Inventory Q1 2024
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By the Leeham News team
April 29, 2024, © Leeham News: The Boeing Co (BA) released its financial results on April 24 for the first quarter of this year. BA relies heavily on Program Accounting to determine what amount of expenses are to be deducted against income, which is a major feature of the system.
The company also reveals the latest information about deferred program balances. This is closely related to Program Accounting.
A Quick Primer
Boeing describes program accounting in its financial statements:
Boeing Commercial Airplanes (BCA) develops, produces, and markets commercial jet aircraft principally to the commercial airline industry worldwide. Revenue on commercial aircraft contracts is recognized at the point in time when an aircraft is completed and accepted by the customer.
With respect to each of our commercial aircraft programs, inventoriable production costs (including overhead), program tooling and other nonrecurring costs, and routine warranty costs are accumulated and charged as cost of sales by program instead of by individual units or contracts.
Source: Boeing Financial Statements
As such, expenses reported for the sale of aircraft during the reporting period are not what was paid, but what BA estimates the average cost will be over the remaining orders and aircraft to be sold. Any overages are noted as an increase in Deferred Production Costs and are held in Inventory.
A350-1000 or 777-9? Part 3
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By Bjorn Fehrm
April 25, 2024, © Leeham News: We are doing an article series comparing the capabilities of the Airbus A350-1000 and the Boeing 777-9. We looked at the development history of the aircraft and compared their size and payload capacity.
Now, we use our Aircraft Performance and Cost Model (APCM) to fly the aircraft on a typical route and compare their performance. We also look at their stage of development and the potential for future upgrades inherent in the design.
Summary:
- The A350-1000 has got its Maximum TakeOff Weight (MTOW) increased four times since entry into service.
- The latest MTOW hike to 322t gives the A350 a clear payload-range advantage over the 777-9. Any increase in the 777-9’s MTOW will have to come after type certification.
Boeing CEO promises company is turning around…again
By the Leeham News Team
April 24, 2024, © Leeham News: Boeing burned about $3.9B in free cash and posted a loss of $1.13 per share during the first quarter, the company reported on Wednesday. It also reported its first quarter-over-quarter revenue decline since 2022.
Even so, the bleeding was substantially less than expected by Wall Street, which had a consensus forecast of -$1.63/share (and a range of -33 cents/share to -$3.16/share). Boeing Commercial Airplanes’ financial performance suffered from the downturn in 737 MAX production since the Jan. 5 accident involving Alaska Airlines Flight 1282, when an emergency exit door plug blew out as the plane climbed out of Portland.
The company’s quarterly finances were bolstered by Boeing Global Services and Boeing Defense.
Boeing CEO David Calhoun continued to assert that company executives are proactively cleaning up an inconsistent safety culture and addressing production woes from their corporate offices on the Potomac. The company’s planned acquisition of Spirit AeroSystems is taking longer than expected, and it could be wrapped up by mid-year, he told investment analysts during a conference call on Wednesday.
Fuselages for the 737 MAX program from Wichita have fewer and fewer defects, and the program’s production rate will increase in the second half of the year, Calhoun and Boeing CFO Brian West said during the call.
SPEEA, Boeing at impasse over safety program, union says
By Scott Hamilton
April 23, 2024, © Leeham News: Boeing and its engineers/technicians union, the Society for Professional Engineering Employees in Aerospace (SPEEA) are at an impasse over the proposed creation of a safety program widely used by airlines and other companies, the union says.
The Aviation Safety Action Program (ASAP) is already in use by Boeing for flight testing. And the touch-labor union, the International Association of Machinists and Aerospace Workers (IAM) District 751 and Boeing recently adopted an ASAP that is in its early stages of implementation.
ASAP is a program, used across the airline and aerospace industries, by which employees may pass safety concerns to the regulators, in this case, the Federal Aviation Administration (FAA), without fear of retaliation or retribution.
“The ASAP program was designed for FAA-certified airmen—pilots, mechanics, dispatchers,” said a former Boeing employee whose duties at one time included safety. “In the airline world, nothing gets pre-screened. For a reason! The ASAP program is set up for Boeing flight tests. Production pilots at Boeing operate this way.”
- SPEEA internal memo with its safety concerns: Safety culture memo 041024
“We have offered SPEEA the same agreement we signed with the IAM and the FAA to strengthen safety, quality, and compliance,” a Boeing spokesperson said in an email to LNA. “We believe it will make a difference in ensuring product safety. This tri-party agreement is modeled after the longstanding and proven Aviation Safety Action Program (ASAP) which is used in the airlines and elsewhere in Boeing.”