Leeham News and Analysis
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A deep dive into the single-aisle market
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By Vincent Valery
Introduction
Jan. 23, 2023, © Leeham News: Boeing’s share of outstanding single-aisle orders has fallen significantly behind Airbus. If we include the order book for single-aisle aircraft seating 100 or more passengers of Airbus, Boeing, COMAC, Embraer, and UAC, the American OEM’s market share is now 37% (Airbus has 58%, COMAC 3%, Embraer 2%, and UAC 2%).
Richard Aboulafia sees a risk that Boeing’s market share in the single-aisle market will dip below 30% without the entry into service of a new aircraft before 2035. Boeing Commercial Airplanes CEO Stan Deal said that it is viable for the American OEM’s single-aisle market share to stay around 40%.
A321neo Credit: Airbus
In the 2022 Boeing outlook, LNA also noted that there are significantly more A320ceo than 737 NG operators. A broader operator base means more opportunities to place new orders with a more diversified group of airlines. In the context of no new single-aisle family entering service in the next 10 years, convincing operators to “flip” to the competition will be the primary way to increase market share.
Exclusively looking at the nominal order books and A320ceo and 737 NG operators does not provide a comprehensive view of Airbus’ and Boeing’s relative positions in the single-aisle market, though.
In their 2022-2041 commercial market outlooks (CMO), Airbus and Boeing indicated that nearly half of all single-aisle deliveries would replace older-generation aircraft. Looking at the existing in-service fleet of older-generation aircraft provides a better picture of replacement order opportunities by the OEM.
LNA investigates in this article the existing order books of the five major OEMs and operator bases to better assess their relative competitive positions and quantify the current replacement order opportunities.
Summary
- A comprehensive single-aisle fleet snapshot;
- Breaking down the order books between replacements and growth;
- Keep track of order choices for older-generation operators;
- Remaining replacement order opportunities;
- A word about single-aisle freighters.
HOTR: Boeing ponders 777-300ER P2F program, again
By the Leeham News team
Jan. 19, 2023, © Leeham News: Already well behind the 8 ball in delivering 787s, Boeing quietly advised some customers recently that they may see yet another delay—this one up to 15 months. Some customers expecting 787s in 2024 now expect them in 2025.
These additional delays are causing some airlines to retain Boeing 777 Classics longer than planned. Others want to re-lease 777s returned or sold to lessors on the expectation of 787s deliveries.
Retaining 777 Classics has implications for the cargo market. There are three conversion companies: IAI Bedek, the launch P2F firm; Mammoth Freighters; and Kansas Modification Center (KMC). These companies rely on feedstock from the airlines and lessors for their conversions. Retaining 777s may cause a dip in the feedstock.
Pontifications: “What can be. What should be.”
By Scott Hamilton
Jan. 17, 2023, © Leeham News: “What can be. What should be.”
This was the title of an address last week at the University of Washington’s aerospace department. The speaker: the former CEO of The Boeing Co., Phil Condit.
Condit was named president of Boeing in 1992 and CEO in 1996. He retired in 2004 after a lifetime career at Boeing, with leadership roles in the 747, 757, 757, 767, and 777 programs.
With ecoAviation the soup de jour these days, beneficiaries of billions of dollars of investment (much of it stupid money) and the subject of much greenwashing, Condit had frank and candid observations about these concepts.
Although Condit retired from Boeing in the wake of the USAF tanker procurement scandal dating to 2001, his engineering skills and fundamental visions were highly regarded. He put these skills to good use a week ago.
HOTR: Air India faces a host of problems as owners negotiate massive jet deal
By Bryan Corliss
Jan. 11, 2023, © Leeham News:
Air India – now owned by the Indian industrial giant Tata Sons – is reportedly close to placing what may end up being the largest commercial aircraft order in the industry’s history.
Air India image of a Boeing 787 in the airline’s livery.
The market is a key one for Boeing, especially right now, after it has been locked out of China because of geopolitical tensions. Air India, in particular, is said to be negotiating with Boeing to take up to 50 737s originally built for Chinese airlines, as part of a massive order that could total 500 planes.
As LNA reported back in September, Boeing has about 140 737 MAXes ordered by Chinese airlines or leasing companies ordering on their behalf. That’s about 50% of the total number of built but undelivered MAXes Boeing had in storage going into last year’s fourth quarter.
It’s fortunate for Air India and Boeing both that the airline has a need for a lot of new aircraft at a time when Boeing needs to move a lot of planes, but adding new aircraft is just one of many major challenges Air India’s new owners face right now.
SUMMARY:
- 2023 in India: Two airlines dominate
- Air India may snap up Chinese whitetails
- Tata has a lot of work to do
Airbus and Boeing 2022 orders and deliveries
By Bjorn Fehrm
January 10, 2023, © Leeham News: Airbus and Boeing released their 2022 delivery and order data today. With a delivery of 661 airliners, Airbus is a 38% larger supplier than Boeing at 480 aircraft.
Airbus had a target of 700 deliveries but came short due to supplier constraints in a year of COVID recovery, raising energy prices due to the war in Ukraine and labor shortages. Boeing is not out of a tunnel caused by 737 Max crashes and 787 quality problems.
On the order side, Airbus booked 820 net orders versus Boeing’s 774. The Airbus backlog is 33% larger at 7,239 aircraft versus Boeing’s 5,430 jets.
Boeing needs “real honest-to-God product development:” ex-CEO
By Scott Hamilton
Ex-Boeing CEO Phil Condit. Credit: Leeham News.
Jan. 10, 2023, © Leeham News: An ex-chief executive officer of The Boeing Co. said Jan. 9 that the company needs to undertake “real honest-to-God” product development, or it will lose the skills required to do so.
Phil Condit, the CEO was named president of Boeing in 1992 and CEO in 1996. He retired in 2004 after a lifetime career at Boeing, with leadership roles in the 747, 757, 757, 767, and 777 programs. Speaking at the University of Washington aerospace school, Condit was asked about Boeing’s product development.
“I’ve got to be really careful,” Condit replied, choosing his words carefully. “I’ve been retired for almost two decades. I think there are some things that I have heard and observed that I agree with, like SAF as a place to go, is one of those. I think it’s important for Boeing to do some real honest-to-God important development because over time you lose skill. If you don’t do things, you lose your capability to do them. It’s important that skills get exercised.”
SAF is Sustainable Aviation Fuel. Boeing currently is placing its major bets in ecoAviation on SAF rather than hydrogen or battery-powered aircraft, although research and development of the latter two areas continue. Current CEO David Calhoun previously announced Boeing’s commercial airliners will be 100% SAF-capable by 2030. Airbus will, too, but it’s pursuing hydrogen as a major solution to some of aviation’s need to go “green.”
Pontifications: Calhoun’s third year anniversary as Boeing’s CEO
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By Scott Hamilton
Jan. 10, 2023, © Leeham News: In three days, David Calhoun will “celebrate” his third anniversary as the chief executive officer of The Boeing Co.
I put “celebrate” in quotes because I’m not sure Calhoun really is in a celebrating mood. Boeing still has a big hole to climb out of and it’s going to be a few more years at least just to get back to 2019 production levels for the 737. Production levels for the 767/KC-46A are stable with a goal of increasing to 4/mo. Levels for the 777 remain at around two per month, pending certification of the 777X. Production of the 787 won’t get back to its peak of 14/mo, or even 12/mo. But Boeing hopes to achieve a production rate of 10/mo by mid-decade.
In the meantime, things are hardly running smoothly at Boeing Commercial Airplanes (BCA) or Boeing Defense, Space and Security (BDS).
David Calhoun
BCA remains plagued by quality control issues. Inexperienced workers hired to replace those who retired, accepted early buyouts, and normal attrition during the MAX grounding and COVID pandemic have learning curves. Clearing the grounded MAX inventory is slower than hoped. Clearing the 787 inventory will also be a slow slog.
Relations with the Federal Aviation Administration may be better than under Calhoun’s predecessor, Dennis Muilenburg. But Boeing doesn’t have its own “ticketing” (certification) authority restored and another safety investigation is about to begin.
BDS has its own long-standing issues. The Starliner and SLS space programs have been problematic. Losses and delays continue on the KC-46A, Air Force One, T-7, and MQ-25 programs. Legacy programs from the McDonnell Douglas era (the 1990s and before) recorded losses last year.
Boeing Global Services seems to be the only bright spot. Even Calhoun’s announcement on Nov. 2 that BCA won’t introduce a new airplane until the middle of the next decade drew a lot of raspberries from a wide swath of the industry—including, of all things, the Wall Street Journal.
Outlook 2023: stabilizing operations at Boeing
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By Vincent Valery and Scott Hamilton
Introduction
Jan. 5, 2023, © Leeham News: LNA wrote a year ago that resuming Boeing 787 deliveries was among the top 2022 priorities for the American OEM. Despite taking longer than envisioned (until August), the resumption of Dreamliner deliveries proved to be the high point of 2022 for Boeing Commercial Aviation (BCA).
The resumption of 737 MAX operations in China has still not materialized, and clearing the inventory of aircraft produced during the grounding is taking longer than envisioned. Boeing does not expect Chinese carriers to take delivery of their 140 737 MAXes for several years.
While Boeing launched the 777-8F, the 777X had another significant entry into service delay. The EIS is scheduled for 2025, around five years later than envisioned at the program launch in 2013. In October, a new problem with the giant GE9X engine emerged. Analysis is underway by GE. Whether there will be any additional impact on EIS remains to be seen.
Certification of the 737 MAX 7 and MAX 10 appears to be on a path for success. In November, Sen. Maria Cantwell of Washington State proposed extending the deadline from year-end 2022 for compliance with legislative requirements to install a new system called EICAS. EICAS monitors the 737’s systems and guides pilots in handling faults. EICAS is not on the already-certified MAX 8 and MAX 9. The legislation was passed with the assumption that the MAX 7 and 10 would be certified before the effective date.
However, the factors that most impacted BCA’s ability to generate cash flows were supply chain issues and labor shortages. Boeing has still not stabilized production on the 737 line at the announced goal of 31 per month.
In light of all the above, what lies ahead for Boeing in 2023?
Summary
- Critical to stabilize aircraft production;
- Financial drag from the Defense, Space & Security division;
- Avoiding more material certification delays;
- EcoAviation and lack of new product developments;
- Competing for orders without launching a new aircraft
Outlook 2023: Labor shortages continue to plague aerospace
Boeing 777 final assembly line in Everett (WA). Credit: Leeham News.
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By Bryan Corliss
Jan. 4, 2023, © Leeham News: Some aerospace suppliers say the industry is dealing with a shortage of production workers, as well as engineers. Airbus, Boeing and other manufacturers, including engine companies, complain they can’t get to desired production rates because of, in part, a labor shortage.
It’s part of a broader phenomenon across all manufacturing, with one industry group saying there’s an immediate need for 2.1 million factory workers right now.
In some circumstances, this has meant raising wages. In Wichita, the “Aerospace Capital of the World,” there’s a bidding war going on for skilled aerospace mechanics. In Puget Sound, Boeing had to go back to the bargaining table with the Machinists Union in 2019, to negotiate $4-an-hour pay increases for entry-level workers. In Charleston (SC), Boeing reportedly struggles with a higher-than-normal attrition rate as workers leave for higher-paying jobs.
It seems inevitable that the lack of experienced workers will make it harder for companies to deliver parts and finished goods on time, and the absolute need to raise pay will cut into margins. Both these factors could very well be a drag on profits, even as airlines clamor for new aircraft that will increase manufacturers’ revenues.
Summary:
- Analysts warn of ‘labor headwinds’
- Spirit faced with ‘dynamic’ labor environment
- Boeing: 100 new mechanics a week?
- New-hire pay about the same as retail
- High turnover causes supply chain problems
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NTSB issues critique of Ethiopia’s final report of Boeing 737 MAX 2019 crash
By Scott Hamilton
Dec. 27, 2022, © Leeham News: The US National Transportation Safety Board (NTSB) today issued a critique of the newly released final investigation report of the Ethiopian government of the March 10, 2019, crash of a Boeing 737 MAX.
Ethiopian Airlines flight ET302 came five months after Lion Air flight JT610, a MAX, crashed. Both accidents began when the Maneuvering Characteristics Augmentation System (MCAS) activated following a failure of the single Angle of Attack (AOA) sensor to which it was tied malfunctioned (JT610) or failed (ET302).
Boeing issued a notice to MAX operators after the Lion Air crash outlining proper procedures pilots should follow in case MCAS erroneously activated again. The Ethiopian government investigation placed the blame for the crash on Boeing. The NTSB’s critique concluded the pilots failed to follow Boeing recommendations and should be partly held responsible for the probable cause of the crash. Had they followed procedure, the NTSB concludes the pilots could have successfully flown through the emergency.