Update 2: (adds earnings call information): Update 1: (adds Calhoun on CNBC): Boeing cites grounding, COVID, 787 quality issues in 3Q/9 month loss

Oct. 28, 2020, © Leeham News: Boeing released its 3Q2020 and nine months financial report this morning and, as expected, it wasn’t pretty.

  • Boeing burned through more than $4.8bn in cash during the quarter from losses. Another $262m in cash was used on building additions.
  • For nine months, Boeing reported an operating loss of nearly $6.2bn.
  • Debt remains at $61bn.
  • “Commercial Airplanes third-quarter revenue decreased to $3.6bn, reflecting lower delivery volume primarily due to COVID-19 impacts as well as 787 quality issues and associated rework. [Emphasis added.] Third-quarter operating margin decreased to (38.1) percent, primarily driven by lower delivery volume, as well as $590m of abnormal production costs related to the 737 program,” Boeing reported.
  • Boeing Global Services revenue declined by nearly $1bn and earnings fell by slightly more than $400m, impacted by the decline in commercial aviation because of COVID.
  • The value of the commercial airplanes backlog at Sept. 30 was $312.68bn vs $376.59bn. Boeing delivered 98 airliners in the nine months compared with 301 in 2019. The MAX was grounded March 13, 2019, with deliveries halted then.

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Key Airbus, Boeing supplier sees recovery in 2022

By Scott Hamilton

Oct. 28, 2020, © Leeham News: A key supplier to Airbus and Boeing believes there will be a “significant upturn” in passenger traffic and aircraft demand in 2022, well before consensus.

Hexcel provides composites and other materials for the Airbus A320 and A350 and Boeing 737 MAX.

And Raytheon Technologies sees passenger traffic returning to pre-COVID levels in 2023, depending on widespread use of vaccines.

Consensus is a return to pre-COVID levels in 2024.

In its 3Q2020 earnings press release Oct. 20, Hexcel’s CEO, Nick Stanage said, “The overall long-term demand for aircraft and our advanced composites technology remains robust, and the potential for a significant upturn in 2022 and beyond looks positive.”

The actions we are taking will ensure that Hexcel emerges from the effects of this pandemic stronger than ever. As we do, our liquidity will have been strengthened, our cost structure will be reset, and we will be well positioned to deliver strong shareholder returns.”

Quizzed on the earnings call, Stanage elaborated:

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Public data doesn’t support Airbus A320 production rate hike

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Introduction

By Scott Hamilton

Oct. 26, 2020, © Leeham News: Airbus’ 3Q2020 earnings call is Wednesday. News emerged last week the OEM is notifying supplies that they should be prepared to increase production of the A320 from 40/mo to 47/mo in the second half of next year.

It is worthwhile looking at the delivery skyline as it currently exists.

Summary

  • Forecasted delivery stream doesn’t support rat 47/mo until 2024.
  • Airbus appears to be banking on faster recovery from COVID—or
  • Picking up market share from Boeing.

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Pontifications; Does the pandemic change the airliner market dynamics?

By Bjorn Fehrm

October 19, 2020, ©. Leeham News: Airbus and Boeing have dominated the world’s airliner market over the last 30 years. In the next 30 years, will this change?

Before the COVID-19 pandemic, the answer was no. The only viable competitor, the Chinese aircraft industry, would need more time to catch up. But the pandemic has changed the dynamics in the world.

For China COVID-19 is history. For the rest of the World not. China’s society and most noteworthy its travel industry are back to normal. September’s domestic flights were 103.5% of 2019 levels and passenger numbers were at 98% while the rest of the world is busy throttling back network plans from already low levels. We know that airlines in China are stimulating traffic with discounted fares, taking losses in the process. However, they have the backing of the government and it is traffic that ultimately drives demand for aircraft.

The Chinese system handles the crisis magnitudes better than the free world. Will the newfound Chinese self-confidence spread to bootstrapping the in-house air transport industry even further to capture the increased airliner demand?

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Bjorn’s Corner: Do I get COVID in airline cabins? Part 13. DOD tests confirm OEM results.

By Bjorn Fehrm

October 15, 2020, ©. Leeham News: Yesterday the USTRANSCOM and its US Air Force Air Mobility Command (AMC) published the results of extensive airliner COVID infection risk tests. The tests, which were made to check the risks for DOD personnel using commercial flights, were made on United 777-200 and 767-300 aircraft in cooperation with United.

The tests checked aerosol dispersion of the virus in the cabins for both simulated flights and real flights. The result was you need to sit next to an infectious person for 54 hours to inhale a viral load that could make you sick (worst case).

Figure 1. DOD tests in the cabin of United aircraft. Source: DOD.

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Covid in cabins: Low risk, no silver bullet

By Bryan Corliss

Oct. 14, 2020, © Leeham News: Covid-19 has made airlines, aerospace companies and suppliers really, really sick. IATA now says it could be 2024 before worldwide travel numbers get back to something near pre-Covid levels.

To get more paying flyers back in the air sooner, the industry is looking for ways to make passengers feel more assured that they won’t get infected while in the air. It’s leading to some innovative solutions and what some industry insiders say is the setting of long-overdue standards for in-flight cleanliness.

Boeing hand-held UV light. Photo: Boeing.

Boeing developed a system using UV-C radiation to sterilize cabin surfaces. One of Boeing’s best-known suppliers, Teague, designed new gaspers to inhibit the spread of airborne virus particles. And several other suppliers are pushing forward with products that inhibit the growth – and potentially kill – viruses and other microorganisms on high-touch cabin surfaces.

Aerospace suppliers say there’s not one silver bullet that’s going to prevent the spread of Covid-19 on jets.

“Buying our material doesn’t magically make your aircraft clean,” said Mathew Nicholls, the sales director for Tapis Corp., which provides virus-resistant fabric imbedded with silver ion strands for seat covers.”

“It’s the sum of all the parts,” he said in an interview for the current edition of Northwest Aerospace News magazine. “The HEPA filters, the airflow exchange. And now we’ve added this, this and this.”

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Pontifications: Boeing’s latest forecast raises more doubt than hope

By Judson Rollins

Oct. 12, 2020, © Leeham News: Every year, like clockwork, when Boeing publishes its 20-year Current Market Outlook, there is always another upward revision in forecast demand for new aircraft.

So, when the Chicago-based OEM admits that demand has taken a long-term hit, you know the situation must be dire.

Last week, Boeing belatedly published its annual CMO forecast for global commercial jet production and services. The forecast was quite a comedown as it marked a 2% fall from Boeing’s previous expectations for aircraft demand, with a whopping 10% drop for widebodies and freighters.

Airbus has withheld its 2020 Global Market Forecast while it continues to assess the impact of COVID-19. Read more

Bjorn’s Corner: Do I get COVID in airline cabins? Part 12. New results.

October 9, 2020, ©. Leeham News: We interrupt our series about hydrogen as an energy store for airliners to go back to our previous theme for a Friday or two: Do I get COVID in airline cabins?

IATA, Airbus, Boeing, and Embraer did a joint presentation yesterday about their latest knowledge about COVID and flying, and with the Pandemic entering the second wave in many countries it’s a timely subject.

Figure 1. IATA’s statistics over 1.2 billion passengers flying with 2839 contagious persons on board. 44 others got infected during the flights. Source: IATA.

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Gov. Inslee misses the point in his pique over Boeing 787 production decision

By Scott Hamilton

Analysis

Oct. 5, 2020, © Leeham News: The contrast in tones couldn’t be sharper.

With the announcement last Thursday by Boeing it will consolidate 787 production from Everett into Charleston, local political leaders were disappointed but understanding and even sympathetic.

Gov. Jay Inslee

Snohomish County Executive Dave Somers and Everett Mayor Cassie Franklin likened Boeing to a family member who was in crisis. Hard decisions by Boeing were made, but in a crisis, you must. Support your family. Understand the situation. Figure out how to make the best of it to move forward.

On the other hand, Gov. Jay Inslee vowed to review the state’s relationship with Boeing and tax breaks granted to the company. Inslee claimed understanding but his tone was hostile, defiant and angry.


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Nobody should be surprised at Boeing decision

By Scott Hamilton

Commentary

Oct. 1, 2020, © Leeham News: Nobody, but nobody, should be surprised that Boeing is going to consolidate 787 production in Charleston (SC).

This die was cast Oct. 28, 2009, when Boeing announced that the second 787 Final Assembly Line would be placed in Charleston instead of Everett.

It was only a matter of time.

Boeing 787 production and assembly plants in Charleston (SC). Source: Flight Global.

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