HOTR: Boeing still sees MAX 3Q recertification

By the Leeham News staff

June 10, 2020, © Leeham News: Despite COVID slowdowns, Boeing still expects recertification of the 737 MAX in the third quarter, say people familiar with the situation.

Whether this timetable proves out remains to be seen. But this is the schedule Boeing continues to work toward.

The two key regulators are the Federal Aviation Administration and Europe’s EASA. Other regulators are expected to follow their leads.

Concurrent recertification as conventionally thought of—recertification and everyone authorizes a return to service at the same time—isn’t realistic. After EASA recertifies the airplane, the member states’ own regulators must step up and formally do so. This may take a couple of weeks.

China’s CAAC was the first regulator to ground the airplane. It has its own process. There isn’t a reciprocity agreement with the FAA in place. (There are bilaterals, which aren’t the same thing.)

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HOTR: Moving up the 777-8F?

 By the Leeham News Staff

June 4, 2020, © Leeham News: A lawsuit filed by cargo specialist Volga Dnepr against Boeing claims Boeing is running out the clock on the 747-8F.

The report by The Seattle Times makes for interesting reading. Key of HOTR is the reference that Boeing plans to end 747 production within three years. This is longer than LNA believes. Regardless, the three-year timeline fits with information LNA about the 777-8F.

LNA is told Boeing sales floated the possibility of launching the 777-8F around 2023-24. This would bring forward the launch by about two years from plans when the X program was launched in 2013.

Then, the entry into service for the 777-9 was targeted for 2019-2020. This was to be followed by the 777-8 passenger model in two years and then the 8F two years after that.

During the fallout of the MAX grounding, the 777-8 was deferred indefinitely. Now, with COVID upending demand, customers are deferring and talking about canceling 777X orders. Boeing is reducing 777 production from five to three per month. The 777-9 production will go to one per month.

The 777 Classic line is sustained by the 777-200LRF. The 777-8F concept is a couple of frames longer than the -8P but shorter than the 777-9.

Having spent more than $1bn for the advanced Composite Wing Center to build 777X wings and having produced about a dozen 777-9s so far, Boeing needs to boost the X sales prospects.

Bringing forward the -8F is the way to do so.

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HOTR: Mitsubishi, Bombardier set June 1 to close CRJ deal

By the Leeham News staff

May 6, 2020, © Leeham News: Mitsubishi Heavy Industries announced May 7 (Tokyo time) that it will close the acquisition of the Bombardier CRJ program June 1.

Production of the CRJ was to end this summer. The COVID crisis effectively terminates the program now. But the CRJ itself wasn’t the reason MHI bought the program, for US$500m. The attraction was the built-in global product support system for the CRJ that will transition to the M100 SpaceJet. It also provides a new revenue/profit stream as MHI enters the global RJ market.

Along with it, as icing on the cake, is acquisition of Bombardier’s sales team, infrastructure and other assets.

It would take years for MHI and Mitsubishi Aircraft Corp. (MITAC) to establish its own product support system.

This is a major step in development of the SpaceJet as a new global competitor.

With the collapse of the Boeing-Embraer joint venture, MITAC can reinvigorate and strengthen its relationship with Boeing.

Embraer, which said it needed the Boeing JV to compete in the future with Airbus against the A220, increasingly faces higher risks as MITAC and MHI evolve the CRJ product support system and potentially strengthens the Boeing relationship.

MHI also announced that it will immediately write down the $500m acquisition by ¥50bn- ¥ 70bn ($470m-$656m).

 

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HOTR: Airlines, lessors cancel ~250 MAXes since January

By the Leeham News Staff

April 21, 2020, © Leeham News: Since the COVID-19 pandemic went viral beginning in January, there have been nearly 250 cancellations of the Boeing 737 MAX.

Some of these were related more directly to the grounding of the MAX. In fact, it could reasonably be argued that most were. COVID-19 exacerbated the problems, now that passenger demand fell by as much as 95%.

The MAX was grounded globally March 13, 2019. Purchase agreements generally allowed the customer to cancel the contract if delivery is delayed more than 12 months, provided there isn’t an “excusable delay.” Pandemics typically fall under an excusable delay. Grounding by regulators depends on the language in the specific contracts.

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HOTR: American sees virtually no travel for up to 7 months

By the Leeham News staff

April 7, 2020, © Leeham News: “Nobody’s traveling in the next 30 or 60 days,” said Vasu Raja, American Airlines Group Inc.’s senior vice president for network strategy. “But nobody is really making any plans to go travel in the next 90 to 150 days, either.

So reported the Wall Street Journal Sunday.

That basically takes you through the end of the year.

Singapore will suspend its Changi Airport Terminal 2 for 18 months from May 1. (Associated Press.)

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HOTR: Boeing has options to federal bailout, CEO says

By the Leeham News Staff

March 25, 2020: First, Boeing CEO David Calhoun said he wasn’t an insider (after 10 years on the Board of Directors, and as lead director for many of them). No, he merely had a front row seat in the movie theatre.

Then he trashed his predecessor, Dennis Muilenburg, for stock buyback and dividend policies (that the Board approved).

Next, Boeing said it needs a portion of the $60bn in federal aid it requested for the aerospace industry.

Now, Calhoun appears to have put his foot in his mouth again. Or did he?

When asked about the possibility of the government taking an equity position in Boeing as a condition to a bailout, Calhoun said Boeing has options to federal money.

The Wall Street Journal wrote yesterday, “I don’t have a need for an equity stake,” Boeing CEO Calhoun said Tuesday on Fox Business Network. “If they forced it, we’d just look at all the other options, and we have got plenty.”

There’s a very practical reason for Boeing to object to government taking an equity stake. It would effectively shut down bidding on some key defense contracts.

But wait a minute: if you’ve got all these other options, why ask for a federal bailout for Boeing?

Or was this a message to the street that Boeing is OK?

Still, on CNBC’s Squawk Box, Calhoun said if the credit markets stayed closed for eight months, it would be tough for Boeing to remain healthy.

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Heard on the Ramp: Boeing has its 777X sales challenges; Airbus A330neo appears to be next

Heard on the Ramp

We introduce today a new feature, Heard on the Ramp. This column contains news briefs LNA picks up in the market that aren’t expansive enough for stand-alone articles but which are items of interest. Publication will be on an as-needed basis.

By the Leeham News staff

March 10, 2020, © Leeham News: Last year revealed Boeing 777X order problems, with a small customer base and cancellations or deferrals. Perhaps this year will be the Airbus A330neo’s turn.

Out of 337 orders, 156 A330neos are with airlines in trouble or can’t take aircraft (AirAsiaX, Iran Air, HNA), or 46%.

This is without counting the second level of trouble airlines and lessor orders, which may have challenges placing aircraft in today’s unsettled market.

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