Leeham News and Analysis
There's more to real news than a news release.
Bjorn’s Corner: New aircraft technologies. Part 3P. Airframe improvements
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By Bjorn Fehrm
March 10, 2023, ©. Leeham News: This is a complementary article to New aircraft technologies. Part 3. Airframe improvements. It discusses in detail the areas of an airliner airframe where tangible improvement can be made to make it more efficient and thus lower cost combined with less Green-House-Gas (GHG) emissions.
Pontifications: 30-40 MAXes potentially delayed by software issue: Jefferies
By Scott Hamilton
March 7, 2023, © Leeham News: About 30-40 Boeing 737 MAXes potentially will be delivery-delayed by the Option Section Software reconfiguration issue, the investment bank Jefferies Co. reported yesterday. Jefferies followed up on our report published Monday by Airfinance Journal and LNA.
Boeing didn’t much like our story about the new software issue delaying some deliveries of the 737 MAX. The story was joint reporting by AFJ and LNA.
“This has no impact on our [2023] delivery outlook,” a corporate communications representative emailed yesterday, specifically putting this on the record. The statement addresses a point the story didn’t raise.
“Today’s Leeham News article looks misleading in that the software issue it describes as ‘new’ has been known for over a year and isn’t expected to cause incremental delays in 737 MAX or 787 deliveries,” wrote the aerospace analyst at TD Cowen Co. “BA indicates this issue has been known for well over a year, isn’t new, was well understood at the time of their investor day and won’t cause any incremental impact to BA’s projected deliveries.”
AFJ/LNA was told by customers that the issue was discovered last Autumn, which is what we reported. One of the questions posted to Boeing included the Autumn timing. Boeing did not react to the timing outlined.
New software issue delays some 737 MAX deliveries/Update
By Scott Hamilton and Laura Mueller
Boeing 737 MAXes in long-term storage at Moses Lake (WA). About 140 MAXes ordered by China remain undelivered. Credit: Leeham News.
Update, March 9, 2023: Some readers have interpreted this story as reporting that new deliveries directly from Boeing are being delayed. The wording is somewhat ambiguous. To clarify, airplanes purchased by lessors–who have taken delivery from Boeing–are experiencing delays in delivery to their lessees due to the issues with the Boeing software reconfiguration described.
March 6, 2023, © Leeham News and Airfinance Journal: A new issue with a software program is delaying deliveries of some Boeing 737 MAXes by up to a year, joint reporting by Leeham News and Airfinance Journal learned. The Federal Aviation Administration views its use as a safety matter that must be resolved before delivery on aircraft undergoing reconfiguration. It is not a safety issue when aircraft are delivered to the originally intended operator.
The Boeing software, called Option Selection Software (OSS), is used by Boeing to identify software installed on 737 MAXes that must be reconfigured when the airplanes are going from one airline going to another. For example, if a 737 was built for Airline A and instead it will go to Airline B, reconfiguring the cockpit display and related systems may be necessary. We are told that MAXes and 787s are impacted, given their large inventories of airplanes that have been stored long enough that some original customers no longer wanted the aircraft. When sold or reconfigured for a different operator, Boeing uses the OSS to reconfigure the software and identify related parts for any changes.
This issue has not been reported previously.
Analysis: Washington may be best state for aerospace; it needs to get better
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By Bryan Corliss
March 2, 2023, © Leeham News – The AeroDynamic Advisory’s latest Aerospace Competitive Economics Study is out, and while its findings were overshadowed by the comments the firm’s two managing directors made about Boeing that week, there is good data in the report that should be acted upon.
The Washington State Capitol in Olympia.
Particularly if you’re a Washington state lawmaker concerned about the long-term future of your state’s economy.
Washington remains the most-competitive state in America for manufacturing aerostructures and final assembly of aircraft, AeroDynamic determined. It finished ahead of Texas, but while Texas was ”impressive,” it was still “well behind Washington in its overall competitiveness,” the report says.
However, when you take a deeper dive into the numbers, there are some clear gaps in the Washington state game. With the state’s Legislature currently in session in Olympia, it’s our hope (as parochial residents of the Evergreen State), that somebody puts this report in front of policy makers, and that it motivates them to take action this year.
- Taxes, incentives aren’t pressing issues
- Spend more on roads and rails
- Lower building costs by spreading the cluster
- Invest more in research, education
Read more
Pontifications: Visiting AvGeek heaven
By Scott Hamilton
Feb. 28, 2023, © Leeham News: When Boeing began selling off real estate in the greater Seattle area to reduce costs during the 737 MAX grounding and the COVID pandemic, some sacred cows were among the sales.
All the buildings located in Renton on a former horse racing track known as Longacres were sold. The symbolism was painful. These buildings were the headquarters for Boeing Commercial Airplanes. Some buildings where composites were made and research was located were sold.
Buried in the downsizing disposing of the building in Bellevue, a Seattle suburb, that was the long-time home of Boeing’s archives. Documents. Engineering plans. Photos. Film and movies. Records of just about everything you can think of and lots you probably can’t.
And models. Rows and rows and rows of models. Models of every Boeing airplane ever sold. Models of concept airplanes, some really weird.
Boeing archivist Michael Lombardi holds a model of an Avenger Army truck Boeing built during a period of diversification. Credit: Leeham News.
Then there are models and records of things probably 99% of the people who follow Boeing didn’t know Boeing ever did. Boeing built and delivered mass transit rail cars. Military ground vehicles. Small naval vessels. Small passenger ferries.
Where was all this history going to go with the closure of the Bellevue location?
All the records, models, photography, etc., moved to a new and larger location at Boeing’s industrial and design complex in Auburn, a Tacoma suburb. The move was completed in January. I had the opportunity to visit this facility last week.
It is an AvGeek’s heaven.
Bjorn’s Corner: Aircraft technology developments. Part 1.
By Bjorn Fehrm
February 24, 2023, ©. Leeham News: In the Sustainable Air Transport series we finished last week, we described new aircraft technologies developed to reduce Green House Gas (GHG) emissions.
There was one area we didn’t discuss, the progress on conventional technologies to reduce the fuel burn of an airliner.
We now start a series, digging deeper into what we can do with conventional technologies to reduce the fuel burned per passenger kilometer and, thus, GHG emissions.
Figure 1. Truss braced wing, a way to reduce aircraft drag. Source: Boeing.
The pros and cons of Boeing launching a new airplane program sooner than later
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By Scott Hamilton
Feb. 23, 2023, © Leeham News: Many, outside of Wall Street analysts and stockholders, are critical of the decision by Boeing CEO David Calhoun to suspend the development of a new airplane. It will be the middle of the next decade before the company “introduces” a new one.
The view from this month’s Pacific Northwest Aerospace Alliance (PNAA) Conference is split. Speakers like Kevin Michaels and Richard Aboulafia, both from the consultancy AeroDynamics Advisory, favor launching a new airplane program sooner than later. So does aerospace analyst Ron Epstein of Bank of America. He’s a rarity among Wall Street analysts.
While Calhoun pointed to the lack of step-change engine technology as the reason to suspend any development today, LNA previously pointed out that Boeing simply may not be ready internally. Production of the 737 MAX remains challenging and somewhat erratic. The 787 is ticking along at a mere one-half airplane a month. Certification of the 737-7, 737-10, and 777X have yet to be achieved. Boeing’s debt remains in the tens of billions of dollars; about $5bn in due this year alone.
And then there is the supply chain. It’s simply not ready, either. It’s struggling with materials and labor shortages. Some laborers are new and inexperienced. Even Airbus continues to struggle to make its delivery targets. It fell short last year by a wide margin and in January delivered only 20 airplanes.
Calhoun would have had better messaging on these points rather than simply saying technology isn’t advanced enough yet (which is only partly true). Critics may have been more easily persuaded.
Related stories
Pontifications: Bumps ahead notwithstanding, Boeing sees steady recovery
By Scott Hamilton
Feb. 21, 2023, © Leeham News: Boeing will have some bumps in the road (or maybe I should say, some turbulence) now and then, but its chief financial officer is confident the company is solidly on its way to recovery.
Recovery is daunting. There’s $51bn in total debt (more than $34.5bn in net debt), with $5.2bn coming due this year. Production of the 737 and 787 remains erratic. Deliveries are slower than hoped. Certification of the 737-7 and 737-10 has yet to be achieved. Program progress on the 777X is slow. A host of defense programs are in money-losing positions.
But orders picked up nicely for the 737 and 787. Even the 777X won 10 orders, from Air India, after a long, long drought. Debt, huge though it is, is coming down. Revenues are up at Commercial Airplanes and Global Services, though down at Defense.
Brian West, the CFO, outlined Boeing’s outlook during an appearance at a Cowen Co. investors conference last week. There was little new since Boeing held its own investors’ day on Nov. 2 and the 2022 earnings call on Jan. 26. But there are always a few nuggets to come out of these appearances.
A deep dive into the twin-aisle market
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By Vincent Valery
Introduction
Feb. 20, 2023, © Leeham News: Last month, LNA analyzed the single-aisle market order opportunities for Airbus, Boeing, COMAC, Embraer, and UAC. We now focus on the twin-aisle duopoly of Airbus and Boeing.
Unlike in the single-aisle market, Boeing leads in market share: 64% nominally and 69% after Boeing’s at-risk ASC 606 adjustments and LNA’s assessment for Airbus, which doesn’t publish at-risk order numbers. If we exclude government and freighter orders, Boeing’s market share lead is 60% and 65% after at-risk adjustments.
However, the A330ceo family has the broadest operator base, and there are still almost 1,000 units in passenger service. LNA investigates the order twin-aisle aircraft order books and assesses replacement opportunities for both OEMs based on the in-service fleet.
Summary
- Boeing has the edge in the in-service fleet;
- Breaking down the order books between replacements and growth;
- Keep track of order choices for older-generation operators;
- Flip orders and airlines that did not order;
- The twin-aisle freighter market.
Boeing Capital Corp. to be “realigned” within airplane division
By Scott Hamilton
Feb. 16, 2023, © Leeham News: Boeing Capital Corp. (BCC) will be absorbed by Boeing Commercial Airplanes (BCA) as Boeing continues to restructure following the 2019 grounding of the 737 MAX, a 20-month suspension of 787 deliveries, the COVID pandemic and challenges in certifying the 737-7, 737-10 and 777X. Airfinance Journal (AFJ) first reported this latest move.
BCC is Boeing’s aircraft leasing arm. About 181 airplanes are owned, managed, and ordered by BCC.
BCC’s future has been the subject of internal discussion for at least a year. LNA first learned of the discussions last year. Several scenarios were considered, ranging from a spin-off, total sale, partial sale, or a structure that could see Boeing rearranging assets within Boeing Commercial Airplanes (BCA). A partial portfolio sale and retaining certain airplanes appears to be the solution most favored. In recent weeks, multiple market sources indicated some decision was imminent.
Realigning BCC
“We plan to realign the Boeing Capital organization to operate within Boeing Commercial Airplanes, while maintaining strong coordination with Boeing Treasury,” said Brian West, CFO of The Boeing Co., in a memo to BCC employees, AFJ reported. “With the vast majority of BCC’s work focused on our commercial business, this alignment will help ensure consistency of support to our commercial customers. And as we realign, we will look for ways to simplify the organization and focus resources on our core work of supporting our customers and their financing needs.”
AFJ notes that BCC is Boeing’s aircraft leasing arm that was inherited in the 1997 merger with McDonnell Douglas Corp. (MDC) Then called McDonnell Douglas Finance Corp, MDFC served as a financier of last resort for poor-credit companies, aircraft trade-ins, and remarketing, and occasionally providing what’s called backstop financing for more creditworthy airlines, the trade publication wrote.
BCC historically has been a small part of The Boeing Co’s business model. It’s not considered core to its business. Following the prolonged 737 MAX grounding, the suspension of deliveries of the 787 from October 2020 to August 2021, the long-delayed certification of the 777X, and the impacts of the COVID pandemic, Boeing began considering alternatives for BCC. These included closing it, spinning it off, or selling its assets.