Leeham News and Analysis
There's more to real news than a news release.
Ortberg sees path with FAA for returning to full rate 737 production
By Karl Sinclair
Jan. 28, 2025, © Leeham News: Boeing’s CEO Kelly Ortberg, now five months into his job, painted an encouraging picture of the company’s path to recovery in an appearance on the financial news network CNBC before the 2024 full-year earnings call.
Kelly Ortberg, CEO of Boeing. Credit: Boeing.
Ortberg said there is a path for Boeing Commercial Airplanes to win approval from the Federal Aviation Administration (FAA) to return this year to a production rate of 38/mo for the 737 MAX. This is the rate before the Jan. 5, 2024, accident involving an Alaska Airlines 10-week-old MAX 9 in which a door plug blew off the airplane at 14,000 ft after take off from Portland (OR). The accident was traced to a production failure by Boeing. Nobody died, and the injuries were minor. The plane safely returned to Portland for an emergency landing.
Since then, production has trickled along at 20 or less per month. Returning to a rate of 38 and growing beyond is critical to Boeing’s financial recovery.
Ortberg told CNBC this path appears to be on track finally.
Boeing: 2024 Earnings-another bad, bad year
By Karl Sinclair
Jan. 28, 2025, © Leeham News: The Boeing Company (BA) reported its full-year 2024 fiscal results today and it went pretty much as expected: it was another bad, bad year.
The full press release is here.
Boeing had a tumultuous 12 months:
- A door-plug departed a brand new Alaska Airlines 737-9 MAX aircraft shortly after takeoff in January;
- Its commercial crew spacecraft stranded astronauts at the ISS in June;
- The company was forced to an agreement to purchase a major supplier (Spirit Aerosystems) in July;
- A CEO change happened in August;
- The 777X flight testing program ground to a halt due to broken thrust links (also in August);
- A 53-day union strike hit the PNW in September;
- An equity sale to raise cash occurred in October; and finally,
- The 2024 financial year-end was put out of its misery with this filing.
777 P2F market grinds to a halt: lack of feedstock, Boeing, war, money to blame
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By Scott Hamilton
Jan. 27, 2025, (c) Leeham News: Boeing’s inability to deliver 787s on time and continued delays in certification of the 777-9 mean airlines planning to replace aging aircraft or expand must retain older aircraft longer than expected.
Airbus’ inability to deliver the A350 on planned schedules also affects fleet renewal and expansion plans, but to a much lesser extent than caused by Boeing.
IAI’s Big Twin Boeing 777-300ERF. Credit: IAI.
Boeing’s circumstances also mean that feedstock intended for conversions of 777-300ERs from passenger aircraft to freighters upset the business models of the three P2F conversion companies: IAI Bedek, KMC, and Mammoth Freighters.
Finally, certification of IAI’s conversation program is running two years behind schedule, and Boeing’s reluctance to license critical flight control software has also stalled P2F programs.
In addition to the problems outlined above, the inability to convert the big twin 777-300ER to freighters or receive new 777-8Fs and A350Fs in the coming years means that 747-400 freighters, which are gas-guzzlers by today’s standards and expensive to maintain, must remain in service longer than planned.
It’s a bleak picture emerging for the near- to-mid-term freighter market.
Boeing came close to running out of cash in 4th quarter
By Scott Hamilton
Jan. 23, 2025, © Leeham News: The Boeing Co. nearly ran out of cash in the fourth quarter, the company said today as it previewed earnings that will be announced next week.
Boeing’s fourth-quarter cash flow was negative at $3.5bn, in part due to a strike that overlapped the third and fourth quarters.
Fourth quarter revenue will only be $15.2bn, reflecting the 53-day strike by its largest union, the IAM 751 in Washington and Oregon. The strike began on September 13. A new contract was approved on October 31. Employees returned to work by November 12, but retraining and the Christmas-New Year holidays delayed returning to full production.
Boeing said it lost $5.46 per share, or nearly $3.4bn, in the quarter. The company raised $25bn in cash and securities in the quarter. It entered the fourth quarter with $10bn in cash and short-term investments. It had $26.3bn at year-end. These figures illustrate how precarious Boeing’s position had become during the fourth quarter.
Earnings: Pay closer attention to the supply chain than to the OEMs
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By Scott Hamilton
Jan. 23, 2025, © Leeham News: Earnings season begins today. Among the companies followed by LNA, GE Aerospace and Hexcel report today. RTX and Boeing report next week. ATI and Spirit AeroSystems follow the week after. Other suppliers follow then.
Airbus doesn’t report until Feb. 20. Rolls-Royce reports on Feb. 27.
The manufacturers draw the headlines, but LNA found long ago that the supply chain often provides better information to draw conclusions about the future than listening to the OEMs. All it takes is one supplier to fall down on the job to muck up the works for the OEMs.
That’s not to say listening to the OEMs is not important. Clearly, it is. But there’s just no getting around it: the credibility of many of the OEMs is damaged. Airbus hasn’t hit its production ramp up targets in years. Quality control suffers. And deliveries are consistently late.
Steven Udvar-Hazy, executive chairman of the board for Air Lease Corp, says that every single Airbus aircraft, 250 of them, has been late since 2017. That’s long before the pandemic began in March 2020, which caused such disruption continuing to this day. Airbus was still delivering A320ceos during 2017 and 2018, which didn’t have engine issues.
Boeing’s credibility speaks for itself. It doesn’t matter that it has a new CEO. Until Boeing starts performing, anything it currently says is hope, not performance. Post-strike delivery recovery will be an important indicator of Boeing’s performance in the essentially truncated fourth quarter and January.
Suppliers often discuss information on their earnings calls that provides a better understanding of production rates at the OEMs and where downstream issues are or are emerging.
What’s the future of the Boeing 787-8?
By the Leeham News Team
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Jan. 16, 2025, © Leeham News: The short-body Boeing 787-8s have a problem when they come off lease. They aren’t as efficient people haulers as their larger cousins, the -9 and the -10.
Concept of Boeing 787-8F. Credit: Leeham News.
Understanding that, what is their future? 1) Re-lease them to another operator or extend the current leases, both at very favorable rates, to get something out of them. 2) Reduce them to spares, which could work for a few to fill the spare parts pipeline, but after that the spares value really starts dropping as supply goes up. 3) P2F freighter conversions.
Of the choices, a P2F program seems the best way to extract value out of the airframes. The key to making it work is conversion cost. There have been some fairly solid rumblings that Boeing has either completed the conversion engineering package or, in fact, started to offload the planning to Boeing of India to get the package executed. Boeing says there is no current engineering underway but would not comment on previous work.
Related Article
Let’s look at what it takes from the P to the F.
The market is ready for a 787F. But is Boeing?
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By Scott Hamilton
Jan. 9, 2025, © Leeham News: Boeing will cease production of its important 767F and 777F freighters in two years. Emission rules approved in 2017 by the International Civil Aviation Organization (ICAO) and adopted by the Federal Aviation Administration means these aircraft will be non-compliant beginning in 2028. As a consequence, production must cease.
Concept of Boeing 787-8F converted freighter. Credit: Leeham News.
Boeing has a solution to replace the 777F: the 777X family’s -8F is now targeted for entry into service (EIS) in 2028. Many believe that this date is squishy due to repeated delays in the 777X program. The aircraft still isn’t certified. The lead model, the passenger 777-9, was supposed to enter service as early as December 2019. Now, Boeing hopes to deliver the first -9s in 2026. This date remains uncertain, however.
The 777-8F is the next in the family, followed in 2030 by the ultra-long-haul 777-8 passenger model.
Boeing asked the US Congress for an exemption to allow the 767F, based on the -300ER passenger frame, to continue production after 2027. Congress approved the request. But with no orders after 2027 anyway, Boeing’s new CEO Kelly Ortberg announced in October that the production of the 767F will end in 2027. (Production of the KC-46A US Air Force refueling tanker, based on the 767-200ER, will continue.)
The market is ready for a 787 freighter to replace the 767F. But is Boeing ready to launch a program?
2025 remains another year for recovery in commercial aerospace
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By Scott Hamilton
Jan. 6, 2025, © Leeham News: Don’t look for any dramatic new product launches in 2025.
Nor should you expect any dramatic news, absent global upheaval of some kind.
This year is going to be yet another year dominated by recovery. Recovery from the COVID-19 pandemic, which officially ended in 2022. Recovery by the supply chain. Recovery for Pratt & Whitney’s nearly decade-long problems with its Pure Power GTF engines supplying the Airbus A220, A320 family and Embraer E2 jets. Recovery by Airbus from its production and delivery delays. Recovery by Boeing from its series of self-inflicted crises, now beginning the sixth year.
There is just no getting around the fact that the commercial aerospace industry isn’t a smooth-running industry. It’s a long way from 2018, when all sectors were running smoothly. There is still a long way to go to recovery.
Here’s LNA’s take on what’s to come this year.
Boeing touts safety progress but opposes SPEEA initiative
By Scott Hamilton
Jan. 3, 2025, © Leeham News: Boeing today issued an update on its year-long effort to improve safety protocols in the final assembly lines of the 7-Series commercial airplanes.
However, the update received lukewarm reviews from one of its leading unions and some retired employees charged with safety protocols who had complained for years about the safety culture.
Boeing has opposed a safety plan proposed by the engineers’ union, SPEEA. No meeting has been held since March 26 last year, and none is scheduled.
The update comes two days before the first anniversary of the Alaska Airlines Flight 1282 in-flight blow out of a door plug on a brand new 737-9 MAX. The airplane had taken off from the Portland (OR) airport and was passing through 16,000 ft when the plug on the left side aft of the wing blew off the airplane.
Nobody was sitting in the two seats next to the plug. A teenager in the row in front of the plug was nearly sucked out of the plane. There were minor injuries and damage from the decompression throughout the cabin and cockpit. The plane made a safe emergency landing minutes later.
The cause was traced to line assembly personnel’s failure to reinstall four bolts holding the plug in place. The plug eventually shifted in its track and separated from the aircraft. The plug blowout also blew up Boeing’s recovery efforts from the 2018-19 MAX crisis following two fatal crashes. These were traced to a design flaw with a flight system known as MCAS.
In its report issued today, Boeing said that it has:
Overview
- Addressed over 70% of action items in commercial airplanes production based on employee feedback during Quality Stand Down sessions.
- Instituted new random quality audits of documented removals in high frequency areas to ensure compliance to process.
- Added hundreds of hours of new curriculum to training programs, including quality proficiency, Safety Management System (SMS) Positive Safety Culture, and critical skills.
- Mapped and prepared thousands of governance documents and work instructions for revision.
- Significantly reduced defects in 737 fuselage assembly at Spirit AeroSystems by increasing inspection points at build locations and implementing customer quality approval process.
A decade to normal? Delivering every airplane in backlog won’t clear debt to 2018 levels
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By Karl Sinclair
Dec. 20, 2024, © Leeham News: In 2018, the Boeing Company (BA) delivered a whopping 806 commercial aircraft to customers.
That year, the corporation declared revenues of $60.715bn at Boeing Commercial Aircraft (BCA) and an operating margin of $7.879bn.
Operating cash flow was $15.322bn and Free Cash Flow (FCF) was $13.6bn.
2016 was the last year that Boeing did not have a negative net debt position (cash and cash equivalents less short and long-term debt).
In 2018, Boeing increased its net debt position by ($4.158bn), year over year, while spending $12.946bn on buybacks and dividends.
It borrowed money to give to shareholders.
Fast-forward to the end of 3Q2024. Boeing was forced to raise $21bn in a stock offering on Oct. 28, with $57.65bn in total debt and a ($47.18bn) net debt position.
How long will it take Boeing to get back to a position where it can invest in a much needed clean-sheet design to replace the beleaguered 737 MAX family?