Nov. 13, 2017, © Leeham Co.: Washington State’s top aerospace official, John Thornquist, resigned early this month, complaining that the State Legislature cut the Department of Commerce’s budget 78% over the past three years—making it impossible for Commerce to promote Washington aerospace.
Jan. 3, 2017, © Leeham Co.: The New Year is here and it doesn’t look like a good one for commercial aerospace, if measured against previous outstanding years.
There are some troubling signs ahead, piling on to a slowdown in orders from last year that didn’t even reach a 1:1 book:bill.
This year looks to be worse than last. Airbus and Boeing will give their 2017 guidance on the earnings calls this month and next. Bombardier and Embraer earnings calls are a ways off, when each will provide its guidance.
But LNC believes the Big Two in particular will be hard pressed to hit a 1:1 book:bill this year and may even struggle to match 2016 sales.
Boeing’s year-end order tally comes Thursday. Airbus’ comes on Jan. 11.
Oct. 31, 2016, © Leeham Co.: Last week’s order for 14 Boeing 747-8Fs and 14 options by UPS assures continuation of the program through 2020.
If options are exercised, and if previously announced deals with other customers finally are consummated, the program should continue at least well into the 2020 decade.
Oct. 12, 2016, © Leeham Co.: It’s rare when Airbus and Boeing agree on product strategy, but officials of the two companies seemed in almost perfect alignment in separate interviews by LNC last week.
Barry Eccleston, president of Airbus Americas, and Mike Sinnett, VP of Product Strategy for Boeing, each said there is no consensus yet among customers for the Middle of the Market airplane (MOMA), also known as the New Mid-range Airplane (NMA) at Boeing.
Eccleston was interviewed on the sidelines of the annual Seattle conference organized by the British American Business Council Pacific Northwest. Sinnett was interviewed on the sidelines of the annual Governor’s Conference organized by the Aerospace Futures Alliance, a lobbying group in Washington State.
Aug. 22, 2016, © Leeham Co.: It’s the kind of leak that drives a company crazy. Aviation Week obtained an internal Boeing sales target list that is well below a book:bill of 1:1 this year. The math shows that Boeing would have a book:bill of just 0.72:1.
Even this may be optimistic.
The sales target data, obtained by Guy Norris, indicates Boeing had a target of 88 777 sales and 88 787 sales this year.
The list does not distinguish between 777 Classics and 777Xs. So far this year, Boeing booked just eight 777 Classic orders.
It’s booked 19 787 orders.
The target list show 14 orders for the 747-8. Four already have been booked.
The order figures above are through August 16. This sales target list is a few months old and may have changed since then.
Boeing’s guidance has been 1:1.
Aug. 15, 2016, © Leeham Co.: Boeing says it may discontinue the 747 program.
Airbus put the A380neo on indefinite hold. Qantas Airways says it doesn’t want its last eight orders. The OEM will reduce the production to 12/yr in 2018.
There haven’t been any Boeing 777X sales since June 2015. There are only six identified customers and there has been a new, identified customer added since July
2014, when ANA ordered the X.
Sales have dried up for the 365 passenger Boeing 777-300ER and only a smattering of orders have come in for its competitor, the Airbus A350-1000.
What’s happened to the Very Large Aircraft sector? What’s happened to the large, medium twin aircraft sector?
July 25, 2016, © Leeham Co.: Boeing July 21 announced it is taking an after tax charge of more than $800m against the 747-8 program. It also canceled plans to increase production of the 747-8F from the current 0.5/mo to 1/mo in 2019 on the long-held belief demand for the 8F would recover as 747-400Fs age.
In an email to LNC, a Boeing Commercial Airplanes spokesman wrote, “We have consistently said that while there is a cargo market recovery – it is not as robust as we had expected. Our new long term forecast projects cargo traffic to grow at 4.2% per year over the next two decades. But in the short term, the cargo market continues to struggle.
“The 747-8 is closely tied to the cargo market. There is an opportunity starting around 2019 when many 747-400 Freighters will be retired. Some of that replacement could go to the 747-8F, some to 777F, but some of those airplanes won’t be replaced at all. The decision we announced reduces future risk for the program and the company– and allows us to see how that replacement cycle plays out.”
With that, years of forecasts of a solid recovery for the 747-8F that ran counter to many outside Boeing was softened considerably.
July 20, 2016: Aerospace analysts had somewhat different takes on the commercial aviation portion of the Farnborough Air Show. This week’s analyst synopsis includes some of the analyst reports. Between now and the end of the month, earnings season begins reporting the second quarter results. Airbus reports July 27. So does Boeing. Bombardier and Embraer report after July.
Boeing didn’t launch, or even say much, about the prospective 737-10, a slightly larger version of the MAX 9 intended to close the gap between the 9 and the Airbus A321neo. Boeing illustrates the 737-8-based MAX 200 as a separate model in its product line up. The 737-10 will slot in above the MAX 200, if built.
Boeing increased the demand in its 20-year Current Market Outlook for the small, twin-aisle airplane by 5%–a move Airbus claims is aimed at the Boeing Board of Directors to entice it to approve launch of the New Mid-range Aircraft, or NMA as Boeing now calls the MOM aircraft.
Airbus said the MOM sector ends at 240 seats (single class) and only a single-aisle airplane makes sense. This is a shift from long-standing messaging that the A321neo covers the lower end of the MOM sector and the A330-200/800 covers the upper end. This message was advanced as recently as the Airbus Innovation Days at the end of May.
With the rhetoric changing a bit, is it time to redefine the MOM sector?
July 14, 2016, © Leeham Co., Farnborough Air Show: Basking on an order for 30 A321LRs on the final day of the Farnborough Air Show, Airbus’ top salesman said the Middle of the Market sector stops at 240 passengers and it’s best served by a single-aisle aircraft.
John Leahy, Chief Operating Officer-Customers, said twin-aisle aircraft down to 240 or even 220 passengers don’t work economically against a single aisle. The A321LR (Long Range) seats a maximum of 240 passengers and it is single-aisle. Even though Airbus has a 250-seat A330-200R (Regional) and an A330-800 (7,200nm-plus range), Leahy didn’t attempt make a case that these aircraft are suitable for the MOM sector.