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By Scott Hamilton
Feb. 27, 2025, © Leeham News: Boeing CEO Kelly Ortberg met with the company’s engineers and technicians union, SPEEA, on Feb. 7. The meeting was the first since Ortberg was named CEO and took office on Aug. 8.
Neither SPEEA nor Boeing commented on the substance of the meeting. “We discussed matters of mutual concern and agreed to continue the dialogue going forward,” SPEEA President John Dimas said in a benign statement published on SPEEA’s website. Boeing declined comment.
SPEEA’s labor contract with Boeing expires next year. Negotiations won’t begin until next spring. A contract with Spirit AeroSystems’ technical workers represented by SPEEA expires on January 31. Boeing should complete its acquisition of Spirit by summer, so negotiations for that contract will be between SPEEA and Boeing.
Some SPEEA officials, noting Ortberg’s early statements about doing a “reset” with labor relations, complained that he hadn’t met with SPEEA.
But upon his arrival in August, Ortberg had his hands full. Contract negotiations were already underway with Boeing’s largest labor union, the IAM 751, whose contract expired 34 days after his arrival. The union walked out on September 13 for 53 days. Ortberg also had to deal with the long-running safety and quality control issues, the Federal Aviation Administration, and the fact that Boeing was running out of cash.
While it’s early yet, and the meeting between SPEEA and Ortberg only occurred on Feb. 7, on Feb 19, SPEEA published a survey for its members to identify issues and wants for next year’s contract negotiations. The responses must be returned by March 21. SPEEA will keep the results confined to the union’s leadership.
Among the questions is how long members would be prepared to stay out on strike. SPEEA is not prone to walkouts, as is the much more militant IAM.
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By Scott Hamilton
Feb. 24, 2025, © Leeham News: CFM International plans to deliver 2,500 LEAP engines by 2028, enough to power more than 1,000 Airbus A320neos and Boeing 737 MAXes plus spare engines in a single year.
CFM is the 50-50 joint venture between GE Aerospace and Safran. The 737 exclusively uses the LEAP. The A320neo family splits its powerplant business between CFM and Pratt & Whitney’s Geared Turbo Fan engines. Between the MAX and a portion of the A320neo engines, CFM has a solid majority of the market share for the mainline single-aisle aircraft sector.
CFM is the brand for the CFM56 and LEAP, but GE and Safran benefit from the aftermarket business. Between the two engines, the maintenance, repair, and overhaul business is big and profitable.
Larry Culp, CEO of GE Aerospace, spoke at the Barclays investors conference on Feb. 20.
“There’s no question that from an aftermarket perspective, LEAP on top of CFM56 is going to keep us very busy,” Culp said. “We haven’t been particularly good at calling the outlook here because we’ve undershot the reality with the CFM56 the last couple of years.”
Culp said that GE continues to believe that it’s got several years of growth ahead. “We probably don’t see an apex until probably the 2027, 28-ish time period, and then we’ll see a gradual fade with the CFM56.
“I think we’re still talking about 2,000 shop visits at the end of the decade. We’ll see if we’re right or wrong on that, but that’s our current view. I think our partners at Safran have in effect echoed that recently at their own earnings call.”
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By Scott Hamilton
Feb. 20, 2025, © Leeham News: The Tier 1 supply chain is all but dead.
This rather startling conclusion belongs to Kevin Michaels, the managing director of the consulting firm Aerodynamic Advisory. When he explains his thinking, it supports a major shift in the aerospace industry.
He made his remarks at the Pacific Northwest Aerospace Alliance conference this month in the Seattle area.
Tier 1 supplies are the last step in the supply chain, delivering products directly to the Original Equipment Manufacturers (OEMs), such as Airbus, Boeing, Embraer, and the engine makers.
Michaels said the supply chain is “fragile” and “red hot.” “Overall, the supply chain is in better shape than it was last year at this time. It’s in better shape now than it was two years ago. But it’s still incredibly fragile.” OEMs purchase about 75% of the value of the aircraft from the supply chain. Aerostructures are the first tier. And this is where Michaels’ rubber hits the road.
By Scott Hamilton
Feb. 18, 2025, © Leeham News: Universal Hydrogen. Lilium. Volocopter. Tecnam’s electric airplane. Airbus electric. Airbus hydrogen. ATR hybrid.
Eviation was just the latest alternative energy project to bite the dust.
And these are just the ones we’ve heard about.
Boeing declined comment on the status of its WISK autonomous electric air taxi. Its future may have as much to do with the company’s current financial condition and efforts to recover from a series of crises since the March 2019 grounding of the 737 MAX than with technology or business model concerns.
The alternative energy aviation industry, the soup du jour in recent years, is running out of gas, so-to-speak. LNA’s aerospace engineer, Bjorn Fehrm, predicted years ago that battery-, and hybrid-powered airplanes were concepts that wouldn’t fly and that hydrogen’s availability at airports is tough nut to crack.
The International Air Transport Association in October 2021 adopted a goal for the airline industry to achieve net zero carbon emissions by 2050. Aggressive milestones also were adopted. Included were ambitious goals to significantly increase the use of Sustainable Aviation Fuel (SAF), the path favored by Boeing.
Tim Clark, the president of Emirates Airline, said then, Don’t make promises you can’t keep.
The industry, it now increasingly admits, can’t keep these promises.
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By Karl Sinclair
Feb. 17, 2025, © Leeham News: Howmet Aerospace (HWM), a supplier to Airbus, Boeing, and other aerospace companies, last week reported sharply improved earnings for 2024.
Howmet is a Pittsburgh (PA)-based aerospace manufacturer, generally classified as a Tier 2 supplier. It produces components for engines, aluminum and titanium structures, fasteners, and other aircraft components.
On the Feb 13, annual earnings call, Howmet Executive Chairman and CEO John Plant remarked that he expects that Howmet will be well positioned to deal with the effects of the tariffs instituted by President Donald Trump, due to the strong contracts it has. Any costs incurred in those respects will be passed onto its customers.
Howmet is segmented into four divisions: Engine Products, Fastening Systems, Engineered Structures, and Forged Wheels.
By Karl Sinclair
Feb. 10, 2025, © Leeham News: Spirit Aerosystems (SPR) of Wichita (KS) filed an 8-K report with the Securities and Exchange Commission today with a troubling statement in its Investor Presentation:
“Due to Spirit’s cash flow and liquidity position, management expects to make a going concern disclosure in its 2024 Form 10-K. The Company anticipates that it will conclude in its 2024 From 10-K that there is substantial doubt about its ability to continue as a going concern.”
Going concern is an accounting term indicating that a corporation has serious doubts about its ability to continue operations for the next year.
Given Spirit’s important position as a Tier 1 supplier for Airbus and Boeing, this is a troubling development for both OEMs. But it’s not unexpected. Airbus and Boeing have been propping up Spirit for years with hundreds of millions of dollars in advance payments or loans. Without them, Spirit probably would have filed for bankruptcy long before now.
By Scott Hamilton
Feb. 10, 2025, © Leeham News: President Donald Trump announced plans to impose a 25% tariff on imported aluminum and steel this week, including from the USA’s largest supplying countries: Canada and Mexico.
According to Trump’s weekend announcement, China will be tagged with a 10% tariff. Other countries also export these products to the USA, but Trump didn’t mention any.
In the aerospace industry, Boeing and Airbus will be affected. So will suppliers to the two companies.
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By Scott Hamilton
Feb. 6, 2025, © Leeham News: Hope and skepticism for Boeing permeated the sidelines of a suppliers’ conference this week in the Seattle area as the big manufacturer struggles to regain footing following six years of back-to-back-to-back crises.
Boeing’s CEO Kelly Ortberg said on Jan. 28 that the company is on a path with the Federal Aviation Administration to achieve a production rate of 38/mo for the 737 MAX later this year. Afterward, rates would increase in increments of 5/mo every six months. At this rate, production won’t return to the pre-MAX grounding production of 52/mo until the fall of 2027.
But suppliers at the annual Pacific Northwest Aerospace Alliance (PNAA) conference this week interviewed on the sidelines think Boeing won’t hit rate 38 until late next year. If Boeing then could ramp up in increments of 5/mo thereafter, the pre-grounding production rate would be achieved in the fall of 2028, nine years after the MAX was grounded.
Suppliers think the ramp up rate is also optimistic.
But at the PNAA conference, Ihssane Mounir detailed Boeing’s new approach to the supply chain, safety and quality Boeing has adopted since the grounding and after the Jan. 5, 2024, accident involving a door plug separation from an Alaska Airlines 737-9 MAX. Mounir is the Boeing Commercial Airplanes (BCA) senior vice president of Global Supply Chain & Fabrication.
The same suppliers who are skeptical of the ramp plans express hope and optimism of BCA’s plans to return to normalcy.
A few also expressed residual anger toward Boeing over the six years of lurching from one crisis to another that disrupted business.
One supplier noted that it received no tooling orders for years because of the disrupted production and the absence of a new airplane program.
By Karl Sinclair
Feb. 04, 2025, © Leeham News: The Boeing Company (BA) released its 2024 FY Annual Report this week and as expected, it was awash with red ink.
On the Jan. 28, 2025, earnings call, CFO Brian West had this to say, in reference to a question regarding the inventory build-up:
“In terms of the inventory, we’ve got $87.5bn worth of inventory in the company right now…. So that is the big cash flow benefit that we’re going to see over the next couple of years-ish and it’s all because we’ve been sitting on this big investment that we look forward to having unwind with deliveries, and that’s what we’re focused the team on out in Seattle.”
Indeed, the balance sheet does indicate a figure of $87.55bn sitting in the Inventory account, but what is the detailed break-down of what is contained therein?
The recent five-month certification stoppage on the 777X program, due to the thrust-link breaks, forced Boeing to take a charge on the program in 2024 of $3.499bn This is in addition to the $6.493bn reach-forward loss taken on the 777X in 2020.
Along the way, Boeing has also recorded “abnormal production costs”. In 2023 and 2022 the program wrote off $513m and $325m, respectively.
For those keeping track, this is $10.83bn in losses for the variant, without having delivered a single aircraft to an airline or lessor.
It is a recurring problem for Boeing and one that traces all the way back to when it started using program accounting to report earnings.