Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: Air Transport’s route to 2050. Part 20. May 2, 2025
- Supplier Howmet exceeds expectations despite tariffs May 1, 2025
- Airbus 1Q2025 results: So far, so good, but US tariffs make future results unpredictable May 1, 2025
- Does an Airbus A220-500 need a new wing and engines? May 1, 2025
- Teamsters, Boeing have a new contract April 29, 2025
Odds and Ends: Tit for Tat; Lockheed in crosshairs of—Embraer; 787 return to service
Tit for Tat: Airbus announces a big order from LionAir. The next day Boeing announces a big order from RyanAir. Airbus has a big press day for its groundbreaking at Mobile (AL). The next day Boeing announces a $1bn expansion at Charleston.
Lockheed in crosshairs: Embraer is going after Lockheed Martin. Aggressively.
787 Rescheduled: United Airlines put the 787 in its schedule from May 31. The FAA hasn’t cleared the airplane for flight yet, but Boeing has been telling customers to expect the plane’s return to service in May through June.
Washington State Senate budget kills Office of Aerospace; attention turns to House
The Washington State Senate budget adopted last Friday killed funding for the Office of Aerospace, which was created less than a year ago.
The move was driven by the need to find more than $1bn to fund education and the State’s long-running budget shortfalls, brought on by the 2008 global fiscal crisis.
It’s understandable that the Senate, which is controlled by fiscally conservative Republicans and what we call here “Roadkill Democrats” (they’d be called Blue Dog Democrats in Congress), want to make drastic budget changes. The State, which has been controlled by Democrats in the Governor’s Mansion and in both houses of the Legislature, went on a spending binge following the election of Christine Gregoire and Democratic Super Majorities in 2004. The Ds increased spending by 33% on projected 16% increases in revenues. It was wholly irresponsible then and was perpetuated until the fiscal crisis began.
When the current Legislature was being formed, two Roadkill Democrats left their caucus and joined the Republicans in the Senate to form the first GOP control of the Senate since…well, we can’t recall specifically but it may have been around 1996, when we first moved here.
We won’t get into the social cuts of the Republican budget, because that’s not the area we cover in this blog. The move cutting the Office of Aerospace is a big mistake.
Single-Aisle backlog market share between the Big Two
The rivalry between Airbus and Boeing intensified in recent weeks with Airbus landing another major order from a previously exclusive Boeing customer, LionAir. Boeing announced another major order just a day later, Ryanair, retaining exclusivity with this customer.
The market share battle between Airbus and Boeing was fierce and prolonged. The introduction of the A320neo family placed more pressure on Boeing, particularly when it became clear Airbus was going to land American Airlines as a major customer for Current Engine Option and the New Engine Option. Boeing, which had been dismissing the neo as a viable option and dithering about whether to proceed with a new design to replace the 737 NG, found its hand forced. Having no other choice, Boeing launched the MAX, a re-engined version of the 737 NG.
With all the recent orders, we’ve done the math and determined market share for the current generation and re-engined types and sub-types. This data is through March 31 and only includes orders that have been listed as firm contracts, not those that have been announced but not yet firmed up.
Sources are Airbus, Boeing and Ascend Worldwide.
787 battery certification flight plan filed for this morning
Update, 1:30pm PT: The flight test is complete. Boeing issued this statement:
Boeing (NYSE:BA) completed a 787 certification demonstration flight today on line number 86, a Boeing-owned production airplane built for LOT Polish Airlines. Today’s flight marks the final certification test for the new battery system, completing the testing required by the U.S. Federal Aviation Administration (FAA).
Today’s flight departed from Paine Field in Everett, Wash. at 10:39 a.m. Pacific with a crew of 11 onboard, including two representatives from the FAA. The airplane flew for 1 hours and 49 minutes, landing back at Paine Field at 12:28 p.m. Pacific.
The crew reported that the certification demonstration plan was straightforward and the flight was uneventful. The purpose of the flight was to demonstrate that the new battery system performs as intended during normal and non-normal flight conditions.
Boeing will now gather and analyze the data and submit the required materials to the FAA. We expect to deliver all of the materials to the FAA in the coming days. Once we deliver the materials we stand ready to reply to additional requests and continue in dialog with the FAA to ensure we have met all of their expectations.
Original Post:
Boeing scheduled is critical certification flight test for the 787 today.
Boeing’s statement:
Boeing has filed a flight plan to conduct the 787 battery certification demonstration flight today on Line number 86, a Boeing-owned production airplane built for LOT Polish Airlines.
Today’s demonstration flight is the final certification test for the new battery system. The purpose of the test is to demonstrate that the new system performs as intended during normal and non-normal flight conditions.
The flight plan (which is always subject to change) can be viewed via FlightAware, which can also be used to track the airplane’s route, location and progress throughout the flight, at this link: http://flightaware.com/live/flight/BOE272
The flight will take off and land at Paine Field in Everett, Wash. The flight is currently scheduled to depart at approx. 11:00 am Pacific time, but is subject to change. The flight is expected to be approximately 2 hours in length.
We plan to provide updates via Twitter (@BoeingAirplanes). A statement will be distributed to the media via e-mail after the flight is completed.
Separately, Boeing had this to say about advance preparations to return the airplane to service:
We have formed a series of AOG teams to help our customers implement the improvements once certified. One of the teams has already deployed but will not perform battery work until the solutions are certified. Details about the AOG teams are considered proprietary.
Our Aircraft-on-Ground Services team (AOG team) is prepared and equipped to support the implementation of approved modifications to the in-service fleet of 787s. The content of their work packages is driven by our customers’ requests. No work is being done on the battery systems at this time as we are still working through the certification process. AOG teams provide the unique capability for an on-site, comprehensive and integrated modification to airplanes. As always, the safety of those who fly aboard Boeing airplanes is our highest priority.
Reuters quotes Ray LaHood, US Secretary of Transportation (his department oversees the FAA), as saying Boeing has a good solution to the battery issues.
US ExIm financing under attack again; killing it would aid Airbus
US Export-Import financing is under attack again by Delta Air Lines and Republicans.
We understand why Delta is opposed. It believes that ExIm financing of Boeing aircraft to competitors puts it at an economic disadvantage.
But fees charged by ExIm made financing more costly and “market rate,” a move intended to remove the financing advantages. Some airlines, in fact, chose alternative financing as a result.
Delta claims ExIm hasn’t taken into account the impact on losing American jobs. We find this a stretch, since Boeing out-sources thousands of jobs with its industrial partnerships (particularly on the 787) and supply chain contracts. At one time, we seem to recall Delta out-sourced jobs to non-US locations.
Be that as it may, at least Delta has its self-interest at stake and one can’t truly fault the airline for this. But the Republicans are another matter. Although ExIm finances a variety of US industries, Boeing is the prime beneficiary and some Republicans claim this is nothing more than corporate welfare.
ExIm, which has been around since the Great Depression, provides financing that is similar to European export credit support offer to Airbus customers. If Republicans succeeded in killing ExIm (or if Delta does), then Airbus will have a clear advantage.
This falls into the category of “what are they thinking??”
Separately:
Pace increases for 787 return to service
Multiple signs are pointing to the increasing pace for the return to service for the Boeing 787, but a top company official dodged a question yesterday on the timing.
Aviation Week reports that Boeing’s 787 simulators are being fired up again, having been idled for months during the grounding. This comes on the heels this week of a report that ANA is re-training its 787 pilots with an eye toward resuming service in June. There is also a report that Boeing has dispatched to the field engineers ready to begin installing the battery fix once federal approval is received.
But Pat Shanahan, VP of Aircraft Programs, wouldn’t speculate about the timeline about certification.
“Sooner rather than later,” he said during a press gaggle after opening the Everett Delivery Center yesterday. “I know that’s not the answer you wanted to hear. The testing is going very well. The regulators will ultimately determine that timeline. It’s very close.”
Boeing opens new Everett Delivery Center
Boeing today opened its new, 180,000sf delivery center at Everett Paine Field. The three-gate EDC is three times the size of the previous center that was roughly on the same site (the new EDC parking lot displaced the old center), and it’s a whiz-bang design that has high-tech “signing rooms,” entertainment areas and plenty of conference rooms and work stations.
And it has windows, something the old center basically lacked. The new center has a panoramic view of the KPAE flight line (which is filled with 787s and 747-8s right now).
ANA Boeing 787 at the new Everett Delivery Center, seen through the panoramic windows looking west. (Scott Hamilton photo.)
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Deliveries were often effected at the Future of Flight Museum across the tarmac or at a temporary delivery center at the south end of KPAE.
Pat Shanahan, VP of Aircraft Programs for Boeing, noted that in 2010, Boeing Everett delivered 86 wide-body aircraft, followed by 105 in 2011 and 183 last year (a record). He expects another record to be set this year and still another next year.
The exterior of the new Boeing Everett Delivery Center is gun-metal grey, with sweeping airplane-like features inside and out. The band was but one of a group of international entertainers for the opening. (Scott Hamilton photo.)
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Washington Gov. Jay Inslee, in remarks at the opening, vowed to “win” 777X production for the State at Everett. We asked Shanahan following the ceremony if the Everett facility has room for a seamless transition from the 777 current generation to the 777X; or whether something would have to be moved out of the plant, similar to shifting stuff around at Renton to make room for the 737 MAX; or whether production of one of the aircraft currently assembled at Everett would have to cease to make room. Shanahan, not surprisingly, dodged a direct answer and said only Boeing has “options.”
Boeing executive Pat Shanahan (left) and Washington Gov. Jay Inslee following the opening of the Everett Delivery Center at Paine Field. (Scott Hamilton photo.)
KC-46A progress toward summer milestones
Boeing’s KC-46A is moving ahead through milestones as summer approaches, despite being a the Sequestration “hit list” of programs that could be curtailed.
The USAF has previously said it wants to do all that it can to protect the program and the contract, seeking to avoid having to renegotiate the contract with Boeing.
Separately:
- The Puget Sound Business Journal has this article concerning the forthcoming NTSB hearing on the JAL 787 incident.
- US Airways now has echoed Delta Air Lines, saying Sequestration hurt March bookings and last minute travel.
- Buzz here in Seattle is that the 787 will fly another test flight today.
- UBS tracks Dreamlifter flights to gauge 787 production rates and notes that more flights than ever are now occurring. From this, UBS infers 787 production will ramp up according to plan.
Odds and Ends: ANA resumes 787 pilot training; Cash impact on 787; UAL, DAL miss profits; Mile High Club
ANA pilot training: ANA, the carrier with the largest fleet of Boeing 787s, has resumed pilot training for the aircraft, says Reuters. The article has a fair amount of detail about progress in the effort to return the 787 to service.
Cash impact of 787: UBS issued this note yesterday (April 1):
- See 787 as $6B cash drag in 2013: Even assuming battery issue is resolved and Boeing is able to hit its 787 delivery guidance at 60+, we still see 787 as a ~$6B cash drag in 2013 with ~$7B inventory build more than offsetting ~$1B advance draw. Our cash flow forecast assumes Boeing learns like it did on 777 and is worse than Boeing’s guidance for a similar 787 inventory build in 2013 as in 2012 ($5.7B).
- Cash drag could be much worse if battery issue lingers: As long as 787 remains grounded, Boeing is faced with the choice of either slowing production or building physical inventory. Every missed 787 deliveryrelative to Boeing’s >60 forecast adds $100-120M to our baseline forecast for a $6B 787 cash burn.
United, Delta miss profit forecasts: This isn’t good news: United Airlines and Delta Air Lines missed their first quarter profit targets on rising fuel costs. United’s profits have been hit-and-miss since the merger between legacy UAL and Continental Airlines. Delta has been more consistently profitable.
Next up, of course, is the union between American Airlines and US Airways. We’ll be going to the latter’s media day later this month, and obviously there will be much to talk about this year. CNBC has this profile on Doug Parker, the CEO of US Airways and the incoming CEO of the new American.
And finally: So much for the Mile High Club.
Odds and Ends: Finding the “root cause;” The cliche about bad pennies
Finding the “Root Cause:” The world waits for the Boeing 787 to return to service, following a series of proposed “fixes” designed by Boeing in conjunction with its relevant suppliers and with help from Ford, General Motors and other experts versed in lithium ion batteries.
The National Transportation Safety Board, investigation the Japan Air Lines battery fire in Boston, and the Japanese investigators trying to figure out the battery melt-down of the ANA battery in Japan, have yet to identify the root cause of the issues.
This disturbs many, who question the wisdom of prospectively returning the 787s to service without know the root cause. We confess we’re not too happy about this, either…the idea of an in-flight fire simply scares the bejesus out of us. (So does Boeing’s insistence no “fire” occurred, just two-inch flames in the JAL case and none at all with ANA. This simply is an eye-roller.)
But Sunday we were watching a program on the Smithsonian channel called Air Disaster. This program examines air accidents and near-accidents and this particular episode was called Turning Point, about Northwest Airlines flight 85 in 2002.
The flight was two hours west of Anchorage on its way to Tokyo (six hours away) when there was a rudder hard-over. Through superb airmanship, the flight returned to Anchorage and a one-shot emergency landing. The flight landed safely.
Investigators determined the Power Control Module (PCM) end cap blew out. The connecting rod went beyond the end of the PCM end cap and jammed the rudder. There was no apparent reason why the end cap blew out.
The long and the short of it: the NTSB could not find the root cause of what happened. But “stops” were added to the PCM to prevent the connecting rod from extending beyond the end cap location should another end cap blow out. Four years later, one did and the Air France 747-400F landed safely. Only then was it discovered that a design defect caused the failure.
This brings us to the 787. Many ask how the Federal Aviation Administration can clear the 787 to return to service without finding the root cause first. Boeing’s redesign has several elements to it, but to us the key one is the element intended to deny oxygen to the battery and thus snuff any fire before it can get started. Basic science tells us if there is no O2, there is no fire.
We recognize that many will say Boeing, its suppliers and the FAA should have designed this system in the first place. But as we have written on more than one occasion, aviation is replete with instances where testing was thought to be adequate only for later service to demonstrate through incident or worse that a flaw worked through the system. We’re just glad this flaw was discovered before any lives were lost or even any serious injuries occurred.
As for the prospect the FAA will allow the 787 to return to service but with ETOPS restrictions: we don’t see why restrictions should be imposed. When Reuters asked for our opinion about the prospect the FAA might restrict the 787 to only over-land flights, we said this would be very damaging and this is true. Since then there has been some speculation the ETOPS would be reduced from 180 minutes to 120 minutes. While this would be inconvenient, costly to airlines and still hurt the 787 business case, this is far less damaging than prospectively restricting the airplane to over-land flights.
Boeing said that it expects no restrictions (Mike Sinnett, 787 engineer, at the Tokyo press conference). Our view is rather pragmatic (or fatalistic, depending on your point of view). Given the information from Airbus in a 2012 fire-and-smoke study (totally unrelated to anything involving batteries or the 787) that a fire can go out of control in eight minutes and you need to land within 15, it doesn’t really matter whether ETOPS in 60, 90, 120, 180 or 330 minutes. If there is an airborne fire, chances are you’re cooked no matter what the ETOPS. (It also might be problematic for land within 15 minutes from a cruising altitude of 41,000 feet to an airport that could accommodate the 787 in any event.)
Note: we caution readers planning to comment on the above to watch yourselves. We’re clamping down on spurious and ill-considered tirades.
Bad Pennies: You know what they say about bad pennies always coming back. This couldn’t be more true with Scot Spencer, the convicted felon who keeps turning up in commercial aviation circles. We knew this guy when he and others purchased Braniff Inc (the second one) from the Hyatt family, ran this into the ground and bankrupted it, then started a third Braniff. Spencer and one of his co-investors went to jail for bankruptcy fraud.
Reputations of several respected airline officials Spencer and his co-investors hired to run Braniff Inc were damaged by their association with Spencer. We then wrote for trade magazine Airfinance Journal and revealed a scheme called upstreaming from a series of aircraft leases whereby Spencer and his co-investors bumped the lease rates they paid to higher rates subleased to Braniff, adding tens of thousands of dollars per month to Boeing 737s leased to the carrier through a separate company owned by Spencer and his co-investors. Once this was revealed, a $100m financing was withdrawn prior to closing. Braniff Inc ceased operations a few months later.
The Department of Transportation banned Spencer from future airline involvement, so he went to San Bernardino (CA) and in a move that still baffles us, persuaded elected officials there to give him millions of dollars in contracts to develop the former Norton AFB into a commercial airport. The project was silly to begin with–the Ontario Airport is just down the road–but even knowing Spencer was a convicted felon didn’t dissuade these stupid officials from giving Spencer contracts.
This story, complete with photo of Spencer in custody and hiding his handcuffs, has links to several other stories.
This old document has some of the sordid history of Spencer’s involvement with Braniff.
Here is a court record of Spencer’s bankruptcy fraud.