Leeham News and Analysis
There's more to real news than a news release.
Muilenburg’s debut as CEO on Boeing earnings call
July 22, 2015: Dennis Muilenburg made his first appearance today on a Boeing earnings call as president and CEO.
Dennis Muilenburg, president and CEO of The Boeing Co. Photo via Google images.
Jim McNerney, who was chairman and CEO until June when he relinquished the CEO title to Muilenburg, began the call before a transition to Muilenburg for the balance of the call and future calls.
McNerney said Boeing’s growth has been organic and he expected Muilenburg to continue growth and performance of Boeing.
Muilenburg hit the KC-46A $835m (pre-tax) charge at the top, expressing disappointment in the charge and the technical issue with the fuel system that led to it. The first flight test aircraft will return to the air this month, and the second aircraft–the one equipped with the refueling system boom and drogues–will have its first flight “this summer.”
“Notwithstanding the tanker charge,” Boeing delivered a strong quarter and financial performance, Muilenburg said.
Boeing 2Q/1H 2015 earnings
July 22, 2015: Boeing reported its 2Q2015 and 1H2015 earnings today, with higher revenue, $3.3bn in the all-important cash flow and a strong commercial backlog.
The earnings call presentation is here. The earnings call is here at 10:30am EDT.
This is the first earnings call for Dennis Muilenburg, who received the CEO title in July when Jim McNerney was kicked upstairs to non-executive chairman. Muilenburg had been president and COO since December 2013.
Last week, Boeing announced a pre-tax charge against the KC-46A tanker program of more than $800m ($523m after tax). This brings the pre-tax charges to about $1.3bn. Some analysts believe the latest charge was set before Muilenburg became CEO, while other observers believe this could be the first example of Muilenburg willing to take tough decisions that McNerney wasn’t willing to accept when it came to program charges.
Here is the first take from aerospace analysts:
Pontifications: Boeing takes another charge on tanker program; What’s next?
By Scott Hamilton
July 20, 2015, © Leeham Co.: Boeing on Friday took another charges against its USAF aerial refueling tanker program, the KC-46A, this time $536m after taxes ($855m before taxes). This brings the charges to date to more than $800m after taxes ($1.3bn before taxes).
So much for my vacation and skipping Pontifications this week.
The new charge is split between Boeing Commercial Airplanes ($513m pre-tax) and
Boeing Defense, Space & Security ($322m pre-tax). This is because the KC-46A is based on the 767-
Japan’s KC-767. What about “lessons learned?” Photo via Google Images.
200ERF and BCA is principally in charge of the development.
Last week, the USAF–before the Boeing announcement–said it still expects the first production tankers to be delivered on time, in 2017, but Boeing Commercial’s recent track record of developing, producing and delivering airplanes on time and on budget leaves a lot to be desired.
Options for Singapore Airlines to operate direct flights to the US.
By Bjorn Fehrm
Subscription required.
July 20, 2015 © Leeham Co. Last week week we wrote about how Singapore Airlines is in talks with Airbus and Boeing to find a suitable solution for its Ultra-Long Haul airplane needs. Now we go deeper into the subject, looking at the background to the need, the aircraft options and their economics.
We also check if the different aircraft options could open the famous Singapore-New York route again, this time with acceptable fuel economics.
Summary:
- We explore SQ’s options for US direct traffic, looking at possible aircraft and their fuel economics.
- The A340-500 flight to New York was stopped because of to high fuel costs. We show what the fuel consumption would have been with the 777-200LR.
- Should Airbus decide to launch the A350-900LR a specially equipped version could re-open the famous route. We show how and with what fuel gains over A340-500 and 777-200LR.
Airbus in talks with Singapore for ultra-long range airplane; “A350-900LR” likely
We believe Airbus is close to launching an “A350-900LR” (Long Range) in response to talks with Singapore Airlines for a longer-range airplane.
July 14, 2015 © Leeham Co. Singapore Airlines is in talks with Airbus and Boeing about an Ultra-Long Haul airplane that can fly from Singapore to the US non-stop.
The talks were first reported by Bloomberg News June 17, during the Paris Air Show.
Singapore discontinued the flights to Los Angeles and Newark when rising fuel prices made operation of the Airbus A340-500 used on the trips uneconomic.
Boeing currently has one airplane capable of service to Los Angeles, the current generation 777-200LR, which has a standard range of 8,665nm but not to Newark which is 8,300nm great-circle without the unpopular Additional Cargo-bay Tanks (ACT), any wind or longer range alternate would exceed the capabilities of 777-200LR in standard config. Los Angeles is 7,560nm from Singapore and when flying west the extra range in the standard 777-200LR would be needed to combat the prevailing westerly winds on the mission.
The Airbus A350-900 has a range of 7,900nm when transporting the same 301 passengers as 777-200LR. Boeing’s forthcoming 777-8X has a planned range of 9,300nm but it’s entry-into-service isn’t planned until around 2022.
Boeing 777X heading towards design freeze a bit heavier than planned.
By Bjorn Fehrm
Subscription required
Introduction
July 12, 2015, © Leeham Co. As we reported from Boeing’s Paris Air Show briefing, Boeing’s 777X project is progressing to a design freeze later in 2015. At the briefing everything was presented as being on track with no changes of key data. There have been signs that this in not fully the case. The 777X program is suffering the same disease that hits other aircraft programs, weight gain flu.
To understand it better, we compiled the many indications that points to weight increase and ran them through our proprietary model to understand why and see what it means for the aircraft’s performance.
Summary:
- Weight increase is an evil that all aircraft programs battle with. Our analysis shows that 777X is no different.
- Engine thrust is one of the areas which will be increased to mitigate increased weight. We give the latest status of GE9X thrust development, now beyond 105,000 lb.
- A number of airframe changes have been made. We analyze their consequences and make predictions for future maximum weight increases.
Boeing’s McNerney on 787 costs, obsoleting airplanes
July 8, 2015: Bloomberg News interviewed Jim McNerney, then-CEO of The Boeing Co., June 15 at the Paris Air Show. (McNerney relinquished his CEO title a week later to Dennis Muilenburg.)
Although McNerney got it wrong on the ExIm Bank (he predicted approval before the sunset June 30), the other information he shared is interesting to hear.
- Current airplanes are being obsoleted at a faster rate than ever before.
- Volume production is Boeing’s “friend” on the 787, where costs continue to be a concern.
- Fuel pricing isn’t slowing sales.
The comments about obsoleting airplanes at a faster rate than ever before is a particularly interesting observation. Lessors base much of their business plan on expected useful life of the airplanes, residual values and the ability to sell aircraft for profit before obsolescence. Useful lives typically have been 25 years (before any freighter conversion potential), but the industry has been seeing some scrapping of far younger airplanes, both in the single-aisle and wide-body sectors–and not just for odd-ball airplanes like the Airbus A318. Airbus A319s, Boeing 737-700s, A320s, 737-800s and 777-200ERs have been sent to the scrap heap at relatively young ages that were unheard of a decade ago.
FedEx orders 50+50 767-300Fs (but no 777Fs)
FedEx today announced an order for 50+50 Boeing 767-300ERFs. We previewed this prospect July 8.
But there were no Boeing 777Fs involved, as we reported there “perhaps” might be. FedEx, which also operates the 777F, deferred orders for 11 of these freighters more than a year ago–in 2011.
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Posted on July 21, 2015 by Scott Hamilton
Boeing, Leeham News and Comment
767-300ERF, 777F, Boeing, FedEx