Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Airbus 1Q2024 results: Airbus CEO: “A350 in-service experience drives positive reputation and orders” April 25, 2024
- A350-1000 or 777-9? Part 3 April 25, 2024
- Boeing CEO promises company is turning around…again April 24, 2024
- Solid start for stand-alone GE Aerospace despite cuts to LEAP output April 23, 2024
- SPEEA, Boeing at impasse over safety program, union says April 23, 2024
787 battery diagrams
Boeing Monday (Feb. 18) made available two battery diagrams for the 787 lithium-ion batteries.
Diagram #1
Diagram #2
- The New York Times has a Reuters article revealing the second battery on the ANA 787 had some swelling.
- Boeing was seeking extended ETOPS prior to the incidents, according to this article.
- Bloomberg News has this long article on the prospect of a SPEEA strike vote tonight.
- Where’s Waldo is a famous game. Where are the grounded 787s? See here to find out.
SPEEA vote due tomorrow
As if the Boeing 787 problems weren’t enough of a headache for the company, the second vote by its engineers will be counted tomorrow on a contract offer.
SPEEA members rejected the first contract offer from Boeing in October with a 96% vote. Boeing subsequently agreed to extend the current SPEEA contract provisions except for all issues related to the pension. The headline issue on this section is that Boeing wants to shift from a defined benefit retirement plan to a defined contribution plan. SPEEA says this results in a 40% reduction in benefits; Boeing says it’s less than that but still significant.
Boeing points out that all non-union employees are on a defined contribution plan and new hires for the unions should be, too. Current members would retain the defined benefit plan.
Boeing hopes this split approach will be enough to win approval for the new contract offer.
Also being voted on: whether members will grant SPEEA negotiations authorization to call a strike should the contract be rejected. Executive Director Ray Goforth has already said negotiators would not call an immediate strike, but they will seek a return to the bargaining table.
[Reuters has this article profiling Goforth.]
The hazard is that Boeing could withdraw its “Best and Final Offer” on all the other issues it agreed to and seek to renegotiate the entire contract rather than just the pension issues. Of course, this would incense union members and make a settlement ultimately that much more difficult.
Boeing needs the engineers to resolve the issues surrounding the 787, and to return the plane to service–the number one priority of 2013, says CEO Jim McNerney. The development programs of the 787-10 and 777X can wait (and, according to our information, these have been pushed to the right as a result of the 787 issues). Management’s lead engineer, Mike Delaney, basically said SPEEA members aren’t needed–that Boeing can rely on other engineers to resolve the 787 problems, a statement that went over like the proverbial screen door in a submarine.
In a webcast for SPEEA, Ray Conner, CEO of Boeing Commercial Airplanes, played the patriotic card, according to those who listened to it, by saying a strike would hurt customers and aid Airbus. (Boeing traditionally doesn’t comment on internal employee communications.)
We think the vote will be close, though we don’t know how to define it other than we don’t expect margins to remotely reflect the 96% rejection last October or the 85% rejection by IAM 751 in 2006 (and a similar strike vote). As we’ve talked to people, the sentiment seemed fairly evenly split with a tilt toward rejection and a strike vote.
Unlike IAM 751, which needs a two-thirds vote to strike, SPEEA needs only 50% plus one.
Votes will be counted tomorrow, Feb. 19; results will be known tomorrow night.
Odds and Ends: 787 likely grounded to May; More Batteries; Boeing’s 10K
787 Battery short-term fix: The Seattle Times has this story which recounts Boeing’s effort to design a short-term fix to get the 787 fleet flying again. The scenario outlined in the article suggests the 787 will be grounded at least until May. The story also paints a picture that if the grounding lasts nine months, production would have to slow and financial impacts will start to hurt Boeing.
More on Batteries:
The A350: Reuters has this story on Airbus’ switch from lithium-ion to current technology batteries.
The New York Times has this story about the different directions Airbus and Boeing are taking.
The Puget Sound Business Journal has a good story about the evolving technology of lithium ion batteries and even though the 787 is currently the world’s most advanced airplane, battery technology has advanced beyond the 787. PSBJ787Batteries
On Other Stuff
Boeing issued its annual 10K report on February 11. We were already engaged in the PNAA conference Feb. 12-14 and didn’t have a chance to read it until after the conference. The following excepts are from the 10K.
747 Program: The accounting quantity for the 747 program increased by 25 units in 2012, reflecting the normal process of estimating planned production under existing and anticipated contracts. We continue to incorporate changes identified during flight testing into previously completed airplanes. First delivery of the 747-8 Intercontinental occurred in February 2012.
The production rate increased from 1.5 to 2 airplanes per month in May 2012. Ongoing weakness in the air cargo market and lower-than-expected demand for large commercial passenger aircraft have resulted in pricing pressures and fewer orders than anticipated in 2012. We have a number of unsold Freighter and Intercontinental production positions beyond 2013. If we are unable to obtain orders for multiple Freighter aircraft in 2013 consistent with our near-term production plans, we may be required to take actions including reducing the number of airplanes produced and/or building airplanes for which we have not received firm orders. We also remain focused on reducing out-of-sequence work, improving supply chain efficiency and implementing cost-reduction efforts. If market and production risks cannot be mitigated, the program could face an additional reach-forward loss that may be material.
[787 Information]
[787 test airplanes]: During the fourth quarter of 2012 we finalized an order for one of the three remaining flight test aircraft. We continue to believe that the other two 787 flight-test aircraft are commercially saleable and we continue to include costs related to those airplanes in program inventory at December 31, 2012. If we determine that either of the remaining aircraft cannot be sold, we may incur additional charges.
[787 grounding]: We are unable to reasonably estimate a loss or a range of loss at this time because such estimates are dependent on the ultimate finding as to cause and the timing and conditions surrounding a resolution and return to flight. Any such resolution could have a material effect on our financial position, results of operations or cash flows.
Airbus drops lithium battery for A350
Airbus, A350 and Lithium battery: Airbus has dropped plans to use the lithium-ion battery in the A350. An Airbus official told us, “We confirm we are opting for nickel cadmium for the A350 main batteries to protect the programme schedule. This decision is about protecting the integrity of our program schedule… (it’s not about any safety concerns about Li-ion batteries, we continue in parallel to mature for the A350. With so much uncertainty raised by the Boeing 787 investigation, we are being prudent in order protect our programme schedule. This is business as usual.”
“As a result of making this decision now, Airbus does not expect it to impact the A350 XWB Entry Into Service schedule,” an Airbus statement added.
Odds and Ends: 787-10/777X; 737NG engine issues; American-US Airways
787-10/777X: Aspire Aviation has this long analysis of the current status of these developmental programs.
737NG Engine Issues: Aviation Week on February 8 had a report of thrust irregularities on the Boeing 737NG. The Seattle Times reported it on line last night and in print today. And then the Seattle media went mad. We’re perplexed. The issue goes back five years, it happened 32 times and not since December when a fix appears to have–fixed it. What’s the big deal?
American-US Airways: The long-awaited merger was announced today and to our great relief, the US Airways management will run the place. American CEO Tom Horton is booted upstairs to non-executive chairman, much as was Glenn Tilton in the United-Continental combination. Unfortunately the AA-US merger keeps the awful tail livery rolled out by Horton a few weeks ago.
PNAA conference, Pt 1: Traffic data; AA-US merger thoughts, 787
Each airline region of the world is different and many going through transitions US went through previously, says Bob McAdoo, the airline analyst for Imperial Capital (a boutique investment banking company in California).
McAdoo is speaking at the Pacific Northwest Aerospace Alliance conference in suburban Seattle today. Highlights:
- IATA traffic data doesn’t make a lot of sense any more. I can always get traffic–all I have to do is charge $19. Without knowing the data behind the numbers, traffic data is meaningless. People say US isn’t a growth market, but it’s making money.
- American Airlines-US Airways: Turn back clock to 2005/6: America West took over US Airways and in less than a year had best profit margins in the industry. Boeing is on AA creditors committee and I think there will be MD-80s coming out sooner and these guys (Doug Parker) will run it like a business. These guys will look at a route structure and say what works and won’t work, not a route planning department that likes the look on a map. I think you will see a lot of markets shut down.
- These guys have been in the top one or two in profit margin. US carries more people out of Philly than AA does out of New to Europe.
- This is a non-growth world in many respects.
- McAdoo recalls when he was at Texas International and his job was to put Southwest out of business. “I wasn’t very good at that.”
- Allegiant and Spirit are, in effect, next Southwest. Tells a story of a friend who rode Spirit once and will never ride them again, “but I’ll buy their stock.”
- 737-400 rent $65,000, 737NG (older) $135,000.
Odds and Ends: ICAO says no to lithium batteries;Dendrites and the 787; Deleting Flightblogger
ICAO says no to lithium-ion batteries: The UN organization ICAO apparently will reverse itself and say that lithium-ion batteries should not be shipped as cargo on passenger airliners. This seems like a prudent move, considering the history of fires involving this battery type, even before the Boeing 787 incidents.
Dendrites and the 787: It sounds like something out of your biology class. Microscopic things called Dendrites might be the root cause of the lithium-ion battery fires on the 787, according to the first reporting from The Wall Street Journal. (Subscription required. Here is a Reuters story on the same topic.)
Deleting Flightblogger: Alas, we deleted Flightblogger from our bookmarks. Jon Ostrower created this blog and built it into a major aviation resource. When he departed Flight International for The Wall Street Journal, Flight half-heartedly (if that) continued the column, but there hasn’t been an entry since August.
Rolls-Royce Certifies Trent XWB: Rolls-Royce received certification for the Trent XWB, which will be used for the Airbus A350.
Airbus still ponders battery future: Airbus is still considering what to do about the plans to use the lithium-ion battery in the A350. A Seattle TV station reported Airbus made the decision to drop these batteries in favor of older, proven technology. Airbus told us this isn’t so (yet). Says a spokesman:
We are following the 787 investigation closely and will evaluate whether any recommendation applies to us.
We have a robust design. If this design has to evolve, we have the time to do that before first delivery.
Nothing prevents us from going back to a classical plan that we have been studying in parallel.
We have all options open, which we keep evaluating in pace with the ongoing investigation.
Odds and Ends: Returning the 787 to service; Elon Musk’s Tesla challenges; Droning on
Consensus Building around 787 Fix: There seems to be a consensus building in industry around the timing of the battery fix for the Boeing 787. Customers and suppliers we talk to believe Boeing will have an interim fix developed this month and the aircraft should return to revenue service next month.
Of course, the only consensus that counts is the FAA, EASA and the other regulatory agencies. We’ll see if this develops as others hope.
And Elon Musk wants to lecture Boeing on Lithium Ion batteries: see this story; he’s got problems of his own.
Droning On: The Seattle Mayor has banned his police department from using drones. The SPD is one of the first in the US to use drones for short-term surveillance. The small UAVs have battery endurance for perhaps half an hour (queue the lithium battery jokes). These have been used to look for criminals and traffic accident investigation.
But civil libertarians and those concerned with SPD’s potential for abuse (and not without good reason, given SPD’s track record) created a stink that prompted Mayor Mike McGinn to ban the use.
McGinn is up for reelection and has proved to be a lefty-wacko who is very vulnerable. We think his decision is in character and an effort to appease his shrinking voter base.
Drones for law enforcement are a useful, an inexpensive tool. Civil libertarians are concerned that surveillance will be too wide-spread and invade privacy. We’re confused. Most big city police agencies have helicopters. Highway patrols have airplanes. Each of these can see what drones can see, and civil libertarians haven’t complained about these, at least that we have seen. We see little difference in between drones and these older technologies. See what we’re talking about?
According to news reports, a drone was used to keep an eye on the recent hostage-taking standoff in Alabama.
We have no problem with law enforcement using drones. (Nor do we have a problem with Obama using them, either, but this is a topic for another post.)
787 Completes first battery test flight: Flightaware track
(Click to enlarge image.)
Boeing issued this statement:
ZA005, Boeing’s fifth 787 flight test airplane, departed from Boeing Field at 12:32 p.m. Pacific time on Saturday, Jan. 9, with a crew of 13 onboard (Boeing pilots and flight test personnel). The flight lasted 2 hours and 19 minutes, landing back at Boeing Field at 2:51 p.m. Pacific time. The crew reports that the flight was uneventful.
During the flight, the crew monitored the performance of the main and APU batteries. Special equipment onboard ZA005, which is currently the only member of the Boeing 787 flight test fleet in service, allowed the crew to observe and record detailed battery performance in normal flight conditions.
Data gathered during the flight is considered part of the investigations into the 787 battery events that occurred in January. For that reason, we cannot share any additional details.
We have no flights planned for ZA005 Sunday, but plan to resume flights early this coming week. As a matter of long-standing practice, we do not provide flight schedules in advance of flight plans being filed.
Takeoff photos from today’s flight have been posted here: http://www.flickr.com/photos/theboeingcompany/sets/72157632730482850/. Landing photos will also be posted on our Flickr page when they are available.