John Leahy has been with Airbus 33 years, holding his current position as COO-Customers for more than 20 of these. He retires this month. Jan. 15’s 2017 year-end Orders and Deliveries press conference will be his last. LNC interviewed Leahy about his tenure at Airbus. Parts 1, 2 and 3 appear here, here and here. Today is Part 4. LNC’s Scott Hamilton has known Leahy for nearly 30 of these 33 years.
Jan. 12, 2018, © Leeham Co.: “I want to unwind, get healthy, eat right and not be in a constant state of jet lag. At 44, 45, I didn’t mind it. Right now, the thought of
doing trips to Australia, I’d be jet lagged for three days.”
These are John Leahy’s plans for the first year after he retires in a matter of days after 33 years at Airbus.
When he was younger—that age 45 he referenced above—he thought nothing of working in Toulouse, Airbus headquarters, on Monday, getting on a plane to fly to Southeast Asia and Australia and be back in Toulouse to put in a full day on Friday—working the clock to make the long, long round trip.
“It was sort of fun,” he recalls. “I did a lot.” But not now.
Jan. 11, 2018, © Leeham Co.: The decision last week by Southwest Airlines to defer for four years delivery of 23 of 30 Boeing 737-7 MAXes does not bode well for this sub-type.
Concurrently, Southwest exercised options for 40 of the larger 737-8.
One of only four identified customers for the 7 MAX, with the largest order of 30, LNC considers it highly likely that a good portion of the 23 remaining orders will be
converted to the 8 MAX.
With only 63 identified 7 MAX orders, the aircraft risks becoming a narrowly purchased niche aircraft.
Jan. 10, 2018, © Leeham Co.: Canada upped the ante in the Boeing-Bombardier C Series trade complaint today by filing one of its own against the US with the World Trade Organization.
This filing comes on the eve of the US International Trade Commission (ITC) staff report, due Friday, on whether Boeing was “harmed” by Bombardier’s near-miss in selling the CS100 to United Airlines and an order in 2016 by Delta Air Lines for 75+50 CS100s, with an option to covert some of the orders to the larger CS300.
The US Commerce Department concluded Canada, the province of Quebec and the United Kingdom illegally subsidized the C Series program. Commerce also concluded BBD “dumped” the C Series in the US with the Delta order and attempted to do so with the United competition.
Commerce levied tariffs of about 292% for any C Series imported from Canada.
The Canadian complaint with the WTO challenges the DOC’s action and the pending decision, due next month, by the ITC. The move was expected, but generally thought would occur after the ITC ruled. ITC is expected to support Commerce’s conclusions.
Boeing’s need for engineering talent from Embraer has been touched on by many media, including LNC. But a detailed analysis hasn’t been forthcoming, that we’ve seen.
Not discussed yet is the fact that new airplane programs at Boeing and Embraer wind down in 2021-22, leaving both companies in danger of facing the next decade without new products at a time when competition will be emerging.
The lack of new airplane programs endangers the engineering talent pool. For Boeing, this is already going to be critical as more than 5,500 engineers and technicians reach age 65 in the next 10 years.
Boeing’s New Midmarket Airplane, if launched, will address part of the company’s new product requirement after 2020. On the other hand, Embraer has no new product, although officials have discussed potentially launching a turboprop program.
Dec. 28, 2017, © Leeham Co.: It’s not often that levity appears in briefing papers in US government trade cases, but Delta Air Lines managed to draw LNC’s chuckle in its post-hearing brief in the Boeing-Bombardier trade case.
Delta’s introduction was novel to say the least.
Dec. 22, 2017, © Leeham Co.: Boeing blames a subsidized, price-dumped Bombardier C Series for the poor sales of the smallest member of the 737 family, the -700 and the 7 MAX, but history doesn’t support the claim.
The US Department of Commerce clearly ignored sales evidence that the 737-700 has been “done” for many years and the 737-7 MAX was an unattractive design
that hasn’t been fixed with a redesign; airlines simply don’t want the airplane. Commerce levied tariffs amounting to 292% on C Series imported into the United States in the future.
The US International Trade Commission is currently awaiting post-hearing briefs from Dec. 18 testimony from Boeing, Bombardier, Delta Air Lines and other parties to determine whether Boeing suffered “harm” by the C Series deal with Delta and a near-miss with United Airlines.
If the ITC concludes Boeing suffered harm, the DOC tariffs stand. If not, the DOC action is moot. The loser at ITC is expected to appeal.
Dec. 21, 2017, © Leeham Co.: To absolutely no surprise, the US Department of Commerce yesterday confirmed its preliminary finding that the Bombardier C Series is illegally subsidized and the company illegally “price dumped” the airplane into the US with the 2016 order for 75+50 to Delta Air Lines.
The DOC confirmed its proposed tariffs of nearly 300% on every aircraft or “partially assembled” aircraft.
The confirmation came the day after Boeing, Bombardier, Delta and other interested parties testified before the US International Trade Commission (ITC) over whether Boeing was harmed by the Delta deal and one with United Airlines that Boeing won.
If the ITC determines there was “harm” to Boeing, the tariffs go into effect upon importation. If the ITC finds no harm, the DOC’s case becomes moot and no tariff is imposed.
As LNC reported yesterday, Bombardier said its proposed final assembly line in Alabama will proceed regardless of the ITC ruling. BBD claims this FAL means the C Series becomes a US-produced product, immune to tariffs. Boeing claims the FAL’s purpose is to circumvent the tariffs and a circumvention tariff should be levied in that case.
Dec. 19, 2017, © Leeham Co.: Bombardier will build a C Series final assembly line (FAL) regardless of the ruling from the US International Trade Commission on whether Boeing was harmed by the order from Delta Air Lines for 75 CS100s and options for 50 more.
This is what Bombardier officials told the ITC, under sworn testimony, in the “harm” hearing Monday, according to a transcript.
Boeing officials argued that the plans for a US FAL at Mobile was a feint and that the line wouldn’t be built, claiming it doesn’t make economic sense.
Delta, for its part, said it’s negotiating a contract revision with Bombardier to accept deliveries assembled only from the Mobile plant.
Dec. 18, 2017: Boeing, Bombardier and Delta Air Lines squared off today in the new round of the trade dispute over Boeing claims BBD “dumped” the CS100 in an order with Delta Air Lines in 2016 in violation of anti-dumping and illegal subsidy laws.
The US Department of Commerce this fall, in a preliminary decision, ruled that a 300% set of tariffs should be levied on importation of the C Series. A final decision is due this week or next.
Delta was originally due to take delivery of the first of 75 orders next year. This has been postponed. Since the case started, BBD and Airbus struck a deal in which Airbus takes a 50.01% ownership stake in the C Series program. Bombardier plans to build a final assembly line in Mobile (AL), next to the Airbus A320 FAL, to deliver all aircraft ordered by US carriers from a US FAL.
By Scott Hamilton
Dec. 15, 2017, © Leeham Co.: Was the choice by Delta Air Lines the big “blow” to Boeing many in the media are making it out to be?
It was a PR blow, yes. Even this was limited to those in the know.
But it wasn’t a material blow by any stretch.
Here’s why the hand-wringers are wrong.