Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Solid start for stand-alone GE Aerospace despite cuts to LEAP output April 23, 2024
- SPEEA, Boeing at impasse over safety program, union says April 23, 2024
- Better transparency needed on Boeing’s 1Q earnings call April 22, 2024
- 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
HOTR: China’s desire for aerospace self-sufficiency threatens Airbus, Boeing
By the Leeham News Team
China’s goal for C919
China’s state-run aviation industry is working toward self-sufficiency because of sanctions. But it is these same sanctions that will make it difficult to achieve.
Beijing wants to shift to supplying its single-aisle jet needs to the COMAC C919 by the end of this decade, according to a person familiar with the situation. But ramping production up to meet future demand is difficult under the best of circumstances.
With Western-built suppliers a key to the development of the C919, including the CFM LEAP 1C engines, there is little chance the domestic industry can shift exclusively to domestic suppliers on the scale required in the time desired.
Regardless of the feasibilities, these goals are bad news for Boeing—and most likely for Airbus, too.
Boeing’s dilemma with China is well known. Aside from the geopolitical challenges between China and the US and the well-known slow return to service of the in-country 737 MAXes, Boeing can’t deliver 138 new-build MAXes to China.
Deliveries are blocked for the aforementioned geopolitical considerations. Beijing’s three-year-long zero-COVID policies cratered domestic demand. With the policies recently lifted, passenger traffic is building but it is still well below pre-pandemic levels.
But that’s not all.
HOTR: Boeing slammed in absentia at conference
By the Leeham News Team
Feb. 9, 2023, © Leeham News: Boeing wasn’t present, but that didn’t stop a succession of speakers and suppliers from slamming the company during the annual meeting of the Pacific Northwest Aerospace Alliance this week in Lynnwood (WA).
Boeing boycotted the conference for the second year in a row. In October 2021, Boeing withdrew from the February 2022 conference over an alleged sexual discrimination lawsuit filed by a woman against the then-executive director of PNAA and against the organization. The lawsuit was settled out of court and the executive director today is a woman. But Boeing declined to return to the conference this year.
Boeing’s absence was roundly criticized by suppliers on the sidelines of the conference. The suppliers complained about Boeing’s payment policies (deferring payment to them for 90-120 days) after years of cutting prices under Boeing’s Partnering for Success. They also complained bitterly about Boeing’s lack of transparency and frequently changing production plans. Boeing should have been at the conference to face them and communicate with them.
Kevin Michaels, managing director of Aerodynamic Advisory, is a supply chain expert. For many years, he criticized Boeing’s approach toward the supply chain. Tuesday wasn’t any different. He once again criticized Boeing for its treatment of the supply chain. Noting that suppliers, mainly Tiers 1 and 2, went through “Partnering for Poverty 1 and 2” cutting prices, Boeing then promised payment terms of 30 days. In subsequent days, payments stretched to 60 days, 90 days, and now up to 120 days. Coupled with the 737 MAX grounding, 787 delivery suspension, and the COVID pandemic, the extended payment terms put additional stress on the suppliers.
In terms unusually blunt for Michaels in this forum, he predicted it will not be long before “the shit hits the fan.”
HOTR: Boeing ponders 777-300ER P2F program, again
By the Leeham News team
Jan. 19, 2023, © Leeham News: Already well behind the 8 ball in delivering 787s, Boeing quietly advised some customers recently that they may see yet another delay—this one up to 15 months. Some customers expecting 787s in 2024 now expect them in 2025.
These additional delays are causing some airlines to retain Boeing 777 Classics longer than planned. Others want to re-lease 777s returned or sold to lessors on the expectation of 787s deliveries.
Retaining 777 Classics has implications for the cargo market. There are three conversion companies: IAI Bedek, the launch P2F firm; Mammoth Freighters; and Kansas Modification Center (KMC). These companies rely on feedstock from the airlines and lessors for their conversions. Retaining 777s may cause a dip in the feedstock.
HOTR: Some changes coming to LNA in January
Dec. 27, 2022, © Leeham News: There will be some changes coming to Leeham News on Jan. 1, 2023.
The first is that for the first time since 2017, we adjust our subscription rates. We’ve been including notices in our articles throughout December. We provided notice on our Subscription page on Dec. 1. Here are the new rates:
Subscription Rate Adjustment
Effective Jan. 1, 2023, the following subscription rates will be in effect (US dollars):
-
- Monthly Rate: $59.95. This is for individuals and not corporate employees.
- Annual Individual Rate: $652. This is for individuals and not corporate employees.
- Annual Single User Corporate Rate: $1,632. This is for an individual corporate user.
Enterprise corporate subscriptions begin with Enterprise 3 (three users) and are available for up to 500 users. Please contact us at info@leeham.net for more information.
This is the first rate adjustment since 2017.
Accordingly, we’ll make some adjustments to our content.
HOTR: Supply chain hurts A220 assembly flow, big push to meet year-end delivery target
By the Leeham News Team
Dec. 20, 2022, © Leeham News: Airbus’ woes with the A320 family production line are widely reported. So are Boeing’s woes with the 737 line.
Less well reported are the woes Airbus has with the A220 production lines in Montreal and Mobile (AL).
LNA was informed two weeks ago that the A220 line is its own serious production challenges traced to the supply chain. Rumors circulated that Airbus may shut down the lines to allow the suppliers to catch up.
Airbus’s Montreal office acknowledged challenges but denied the final assembly lines were going to be or were considered for shut down temporarily.
“In order to protect our operations in a complex environment, some ad hoc short-term planning adjustments have been made to align with our supply chain in order to protect our deliveries to our committed customers. We continue to focus on the aircraft that are almost ready for delivery in 2022 and there is no shutdown either of FALs nor pre-FALs planned,” a spokesperson emailed LNA.
HOTR: Tuesday’s Boeing announcement may give indication of A350 future at United
By the Leeham News Team
Dec. 9, 2022, © Leeham News: The engine selection on a big Boeing 787 to be announced Tuesday may be the most definitive signal yet of what United Airlines will do with its oft-deferred Airbus A350 order.
United is considered certain at some point to cancel its orders for 45 A350s. This order has been deferred several times. The new order to be announced Tuesday for up to 100 or more Boeing 787s adds to the more than 60 already in the fleet. United clearly doesn’t need a large fleet of 787s and a smaller fleet of A350s.
But canceling the Airbus order is not without some cost. It’s believed that penalties to Airbus are manageable. These also may be mitigated by an order for A321neos. This can solve Airbus’s concerns. But it does nothing for Rolls-Royce, which provides the engines for the A350s.
Rolls is not an engine supplier for the A321neo. United’s swapping the A350 for the A321 means Rolls loses that future business. What’s the mitigation for Rolls?
United may split the engine order for the 787 between incumbent GE Aerospace and Rolls. If the engine selection is announced Tuesday and the order is split, this will be the clearest indication yet that the A350 order will be history. United and Boeing scheduled a press conference at the 787 production and assembly plant in Charleston (SC).
HOTR: Big airplane orders race toward year end
Dec. 8, 2022, © Leeham News: A year-end aircraft order rush will benefit Airbus and Boeing, according to what LNA is hearing.
Air India
Airbus appears in line to win 50-100 A350 orders from Air India. Boeing appears in line to win an order from the carrier for 100 new-build 737 MAXes and—get this—40 MAXes that were built for China and which have been in storage since 2019. As previously reported, there were about 140 MAXes built for the Chinese. Boeing said in September it couldn’t wait any longer for China to reopen the domestic market to Boeing for the MAXes. Remarketing the airplanes began then.
The Boeing order could be signed as early as this week or next. The Airbus deal is expected by year-end.
Saudi Arabia
Saudi Arabia is expected to agree to an order for around 50 A350s. The new airline, RIA, which will compete with the current flag carrier, Saudi, is expected to be the prime beneficiary. Airbus hopes to conclude the deal by year’s end if not earlier.
Boeing is not in line for an order this year, according to what HOTR hears. But negotiations begin soon.
HOTR: United likely can cancel A350 order with little penalty
By the Leeham News Team
Dec. 5, 2022, © Leeham News: United Airlines appears on the cusp of ordering as many as 100 Boeing 787s, multiple news outlets report. Airbus hopes to sell more A350s to United to supplement the 45 already on order.
But these 45 A350-900s are an order that has been viewed as iffy since United merged with Continental Airlines. Although ostensibly United was the surviving carrier, in reality, Continental was the survivor. The latter’s management displaced United’s old management. The livery retained was Continental’s.
The A350 order was placed by the old United management. The new executives added to the United order, but Continental had been an exclusive buyer of Boeing aircraft and executives were predisposed toward Boeing. UAL now has 120 Airbus A321XLRs on order. But this came after Boeing couldn’t decide whether to launch the New Midmarket Airplane after years of dithering. With a large fleet of Boeing 757s aging and in need of eventual replacement, United could no longer wait for Boeing to make a decision.
United already has a large fleet of 787s. Adding the A350s will provide an extra range that the 787s don’t have. But how many routes need the extra range to justify another fleet type?
LNA believes that United can cancel the orders for 45 A350s at little cost. The deposits may easily be applied to orders for more A321s, but cancellation penalties are believed to be de minimis. Based on 2018 list prices—the last ones published by Airbus—United could get about 110 more A321s in exchange for the A350s. (The number is probably a little less since the XLRs are more expensive than the A321neo “standard;” the list price makes no distinction between the sub-types.)
LNA expects United to cancel the A350s sooner than later and add to the A321 order.
HOTR: Eviation claims “almost” 300 orders worth more than $2bn; Boeing vs Airbus
By the Leeham News Team
Nov. 10, 2022, © Leeham News: Eviation, the developer of the all-electric airplane Alice, today added another 20 commitments to its tally for the aircraft. The latest is from Australia’s Northern Territory Air Services. The commitments are in a Letter of Intent.
A short time before this latest commitment, Eviation issued a press release stating it had “almost” 300 orders (not “commitments and orders”).
“Our order book passing the US$ 2 billion mark is a significant commercial milestone,” said Gregory Davis, President and CEO of Eviation.
“With almost 300 aircraft now on order, the Alice is receiving strong customer endorsement,” Eviation VP Eddie Jaisaree said.
The press release is a little ambiguous on figures: “almost” 300 airplanes and “passing $2bn.”
Using 300 and $2bn for the math, this means the airplanes are $6.67m each. That’s $741k per seat. This compares with $506k per seat for a 787-9 (296 seats, $150m true sales price) and $309k per seat for a 737-9 (178 seats, $50m true sales price). The ATR-42, with 48 seats and a sales price as low as $12m, is $250,000 per seat.
The capital cost of the Alice is awfully pricey and makes the economics challenging, not even counting the maintenance costs of replacing the batteries after a short period of time.
When asked about these facts, Eviation’s PR firm provided this response from the company.
“Our cost is competitive with aircraft in the same class as Alice, and customers will see significant cost savings in operating and maintenance costs. For example, Alice will reduce operating costs by two-thirds when compared to traditional aircraft.”
LNA’s Bjorn Fehrm has analyzed the operating cost of electric, hybrid, and hydrogen-powered aircraft in a series of articles. His conclusions are that these methods are a lot more costly than promoted.
HOTR: Trump’s 757 return
Oct. 26, 2022, (c) Leeham News: There was a bit of a splash on the Internet when the VIP-configured Boeing 757 owned by Donald Trump was delivered to Palm Beach (FL) after undergoing refurbishment and maintenance. The airplane had been in storage since Trump assumed the presidency in 2017.
Trump critics and cynics claimed the airplane has a range of 4,400 statute miles and speculated that Trump might flee to Saudi Arabia or Moscow now that he has his 757 back.
LNA’s Aircraft Performance Model (APM) was put to use to analyze just how far the 757 can go. For this exercise, we ignored winds, hold times, and alternates—focusing only on the advertised range. Passenger-configured 757-200s (Trump’s model, with Rolls-Royce engines) can seat up to 200 people. Trump’s VIP-configured airplane can carry 25 or one—it’s up to Trump. VIP configuration weighs a lot, so this is taken into account in our analysis.
Distance from West Palm Beach (FL) and Bangor, Maine, to Moscow. Analysis by Leeham News Aircraft Performance Model. Graphic from Great Circle Mapper.
The APM analysis concludes that with the maximum allowable extra fuel tanks, the aircraft can go up to 5,000nm when flown with 25 passengers of equivalent weight. Without the extra fuel tanks, the range is 4,000nm. As a general rule, winds, hold time and alternates reduce the range by up to 20%, depending on the flight’s direction.
Ranges from Bangor, Maine, via Leeham News Aircraft Performance Model. Graphic Great Circle Mapper.