Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: New engine development. Part 4. Propulsive efficiency April 19, 2024
- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
- Focus on quality not slowing innovation, says GKN April 18, 2024
- Boeing defends 787, 777 against whistleblower charges April 17, 2024
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
LCAL Cancels 787 order
Also see the Updates after the jump.
LCAL, based in Dubai, has canceled 16 Boeing 787s, it has now been confirmed. This is the cancellation we wrote about on January 14 and hinted overtly about in this post.
LCAL canceled 16 of the 21 787s it had on order. Five of the aircraft were under contract to be delivered to Royal Jordanian, and these remain on the books to be delivered directly to the airline, we understand.
While the number of cancellations isn’t a “wow factor,” what is especially significant here is that LCAL was formed for the express purpose of being a 787 lessor. Because of the 787 program delays, canceling the order puts LCAL out of business, if the Royal Jordanian aspect of this is confirmed. (We’re working on that.)
We understand that penalties paid by Boeing, based on the delays, to LCAL are significant. Boeing attributes the cancellation to “tough challenges” and “other factors;” we understand this is really about the delays to the 787 program.
Assessing the 747 program
Since Boeing’s earnings call last week, spurred on by the Flight International and Everett Herald stories doubting the future of the 747-8 program, we’ve received media inquiries whether we think the program will be canceled.
For those who missed or already forgot our first post of 2009, the answer to this is No. We called 2009 the year of program recovery for Boeing, and this included then and includes now the 747 program. Nothing has happened to change our view.
Our post earlier this week, Keeping or Ditching the 747?, added some color and independent reporting to the stories in Flight and The Herald. We reported–as did Flight–that Boeing has run various scenarios about what to do with the program: cancel it entirely, or keep the freighter but cancel the passenger model, or slow the program down.
For those who understand Boeing’s way of doing things, running all scenarios is SOP, Standard Operating Procedure. For those who understand Boeing CEO Jim McNerney, he’s going to want all options laid out for him. This is his SOP.
Word of these studies quickly became known.
Ryanair and a GTF-powered A320/737
Jon Ostrower has an interesting think piece about the prospect of Ryanair ordering up to 400 Airbus A320s or Boeing 737s powered by the new Pratt & Whitney GTF, or Geared Turbo Fan P1000G.
We first broke the story that Boeing is evaluating the prospect of 737 “re-generation” for an article we did for Aviation and the Environment magazine. P&W is developing the engine for Mitsubishi’s MRJ regional jet and Bombardier’s CSeries, but both airplanes are small. The MRJ seats 70-90 and the CSeries 110-149, but the MRJ has only one order in Japan and the CSeries continues (at this writing) to be stillborn. P&W has been developing the GTF for 20 years; without re-engining the A320 or 737, this investment is pretty much down the drain.
With Boeing and Airbus seemingly putting off a full replacement airplane for their prime jets until around 2020 or even later, airlines–notably Southwest–want a more fuel efficient airplane before then. The GTF would save 12%-15% on fuel burn. As we wrote for AE magazine, Boeing is on track to make some decisions for a 737RG this year with a prospect for an EIS in the 2013-15 period. This is a timeframe P&W can meet to provide the GTF to Boeing.
Airbus, of course, provided an A340-600 test bed for P&W to get some good data for the GTF. This information went to Airbus’ R&D department, where evaluation of a GTF A320 is almost a certainty.
Or not. James Wallace of The Seattle Post-Intelligencer reports that Airbus super-chief John Leahy says there aren’t any talks going on with Ryanair.
FAA weighs in on 787 flight test timeline
Update, Feb. 8:
The Puget Sound Business Journal has this article focusing on the certification timeline.
Original Post:
Boeing has publicly said that it plans a flight test timeline of 6-8 months, depending on when Boeing was making its public statements (it’s been a bit of a moving target). The latest information appears to be an 8 month timeline.
Boeing forecasts making its first flight of the 787 in the second quarter; its internal timeline was about April 20 or 24 (first reported by Air Transport World) but we understand this is now a To Be Determined date, with an internal timeline in June–still within the second quarter, it must be noted. (We previously predicted a first flight in the June-August period, and are at the moment sticking to this.)
All Nippon Airlines, the launch customer set to receive the first airplane, said it expects delivery in February 2010. This reaffirms the anticipated eight month flight test forecast made by Boeing, assuming a June first flight. If the first flight comes as late as August, a February delivery to ANA still is theoretically possible if a six month flight test program can be achieved.
As we previously reported, Boeing has reorganized its flight testing department with the intent of increasing manpower and efficiencies. Full implementation isn’t expected until September, about mid-way into the currently projected 787 flight testing timeline. This suggests the 787 flight test program may partially benefit from the reorganization.
As many have written, previous Boeing test programs have taken 11 months or more and aerospace analysts seem fairly well united in predicting a year-long flight test program is more realistic for the 787 than that suggested by Boeing. So we asked the Federal Aviation Administration what it thinks about the timeline. Here’s the answer.
Keeping or ditching the 747-8?
When Boeing CEO James McNerney gave a somewhat mixed assessment of the 747-8 program last week during the earnings call, this set off a couple of key stories about the future of the airplane.
Michele Dunlop of The Evertt Herald wrote this interesting piece, published today. Max Kingsley-Jones of Flight International beat her to the punch slightly with this story on Saturday.
As readers know, we’ve been closely following the 747-8 development for more than a year and were the first to report that delays were likely.
FAA responds to 787 fastener issue
When we were preparing our report about Boeing planning to operate its 787 flight testing program with some non-conforming fasterners still installed on the first six test aircraft, Boeing responded to our inquiries by noting that it worked with the FAA to ensure compliance with rules and safety.
In a routine action, we also inquired of the FAA. This was January 13; we published our story January 25, still awaiting the FAA response. We received that response today. Here are the questions we posed and the FAA’s answers:
SPEEA to Wichita: Reject contract
SPEEA, the Boeing engineer’s union, today urged its members at Boeing Wichita/IDS to reject Boeing’s last contract.
In this market, observers probably think SPEEA is looney, but SPEEA believes Boeing is gearing up to sell the plant and Boeing won’t offer language to protect the union members in this event. The contract offer is less than SPEEA received for its Puget Sound (Seattle) and Utah workers.
767-400: sold
Boeing sold its 767-400 that was built as the USAF E10 test bed and which we kept asking (without response) if Boeing might convert to a prototype for a bid for a “KC-764” aerial tanker. Flight Global has this report.
Boeing posts loss in 4Q
Update, 3:30 PM PST:
It’s been a busy day responding to media requests for comment about Boeing’s financial results and earnings call. This gives us a feel for how the media viewed the call and the issues they see.
Here are our thoughts after all that.
- Many media viewed Boeing as pointing the finger at the IAM strike for its 4Q loss. There’s no question that the shortfall of some 70 aircraft in 4Q deliveries caused a big hit to the revenue, and that the full year shortfall of some 100 aircraft hit the full year revenue. But don’t overlook the cost-base. Continuing costs for the delayed 747-8 and 787 programs were significant and costs hurt profitability. So did the legal costs. Pointing the finger at the IAM is simplistic.
- Is the 10,000 job reduction the result of the IAM strike and contract? We don’t think so. We think this is Boeing’s prudent response to a lousy global economy.
- We received media questions about whether Boeing is in serious trouble. Our answer is a resounding No. As we’ve previously written, we view 2009 as the year of recovery for Boeing’s airplane development programs. Production lines are returning to pre-strike levels. The one-off nutplate issues are largely resolved for the new airplanes and a program is likely in place for those faulty nutplates on delivered airplanes. Mature airplane programs are humming along.
- What about production this year and next? Boeing personnel meet at least weekly and perhaps more often to assess market conditions. We’re confident they have a good feel for what’s going on in the world and are prepared to take whatever steps are necessary to respond. The question is how quickly can a monolithic organization respond. It takes 18 months to ramp up production with the supply chain. How quickly can it be ramped down, should that become necessary? A key point in the earnings call is that for the first time, Boeing is sounding caution about production beyond this year. Officials refuse to give earnings and production guidance for 2010 at this time.
We remain cautious about Boeing due to the 747 and 787 programs–these need to get flying–and the general global economy, but there is no reason to worry about Boeing itself. The media questions on this score are totally without foundation.
Original Post follows:
Boeing reports 787 order cancellation
Update, 10:00 PST
We’ve learned that the cancellation is not from the customer we thought, so that one is still pending.
So who’s got 15 orders?
Air China
China Eastern
Dubai Aerospace
S7 Group
Virgin Atlantic
We know it is not Virgin Atlantic. Airfinance Journal reports that it is S7 Group.
10:20 AM PST: We can now add that it is not Dubai Aerospace. James Wallace of The Seattle P-I reports that his sources confirm that S7 is the airline.
Original Post:
Boeing has quietly reported that a customer cancelled orders for 15 787s.
We alluded to this pending cancellation in this post.
The news is on Page 4 of its press release announcing its 2008 fourth quarter and full year earnings. The customer is not identified in the release and Boeing doesn’t update its website until tomorrow (Thursday).
We are pretty sure we know who it is, but have not confirmed it so we’ll not mention names yet. Perhaps Boeing will identify the customer in its earnings call beginning at 10:30 EST.
If we’re correct, the significance goes beyond the quanity of 15 and we’ll explain why when we confirm.