Oct. 4, 2018, © Leeham News: A consensus appears to have developed among aerospace analysts that the business model for the prospective Boeing New Midmarket Aircraft is about much more than the profit-and-loss case for a stand-alone airplane program.
It’s something that Boeing CEO Dennis Muilenburg has alluded to many times on earnings calls and elsewhere.
But now, as Boeing moves toward a decision to launch the NMA program next year, the business model has fundamentally become defined.
Note that I say, “toward a decision,” not “if the program will be launched.” I’m convinced Boeing will greenlight the NMA.
Oct. 1, 2018, © Leeham Co.: The Choose Washington NMA task force said last week it will release this month recommendations for improving aerospace workforce activities in Washington.
It’s about time.
The task force was appointed by Gov. Jay Inslee to come up with a plan to persuade Boeing to choose Washington as the assembly site for its prospective New Midmarket Airplane, the NMA.
Two studies, one by the Teal Group and the other by Price Waterhouse Cooper, conclude Washington is the best aerospace cluster and location to build the NMA. The conclusions are unsurprising, given the maturity, size and scope of the cluster in Puget Sound (the greater Seattle area). No other place in the country has this level of aerospace activity.
But the reports failed to adequately address the top priority that Boeing has: the need for skilled workers and engineers.
At long last, the NMA council is getting there.
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Sept. 27, 2018, © Leeham News: Boeing hasn’t gone to a production rate of 57/mo for its 737 and studies have long been underway looking at a rate of not only 63/mo but also 70/mo, supply chain sources tell LNC.
Rate 57, up from 52, is scheduled for next July. Sixty-three has long been considered the maximum allowed for the current Renton (WA) factory, the sole location where commercial 737s are assembled.
But Boeing, in yet another step in its drive for more efficiencies, is analyzing how to push 70 airplanes a month through the same facility.
By Dan Catchpole
August 15, 2018, © Leeham News: If Boeing launches its New Midsize Airplane (NMA or 797), it is expected to use the cleansheet program to force new contract terms on suppliers. And that has some suppliers wondering if it is worth participating in the program at all.
Speaking on background, executives from several suppliers told LNC in recent months that they might not bid on NMA work if it means greater price concessions up front, as well as surrendering lucrative aftermarket sales to Boeing.
Bidding will depend, in part, on whether suppliers can pass cost cuts down to their own suppliers, and if Boeing takes on more risk and development costs to offset lost aftermarket revenue. One exec wondered what it could mean for the company’s engineering capabilities if they have to bid for essentially procurement orders with Boeing holding onto the IP.
By Dan Catchpole
July 25, 2018, © Leeham News: The cash keeps flowing at Boeing. The aerospace giant posted free cash flow of $4.3bn for the second quarter of the year, despite recording $426m in costs related to its delay-ridden KC-46 tanker program.
Despite posting strong earnings, the charge rattled investors, who drove Boeing’s share price down in early trading Wednesday.
Boeing continues to work on closing the business case for its New Midsize Airplane (NMA), a business case unlike any the company has done before, Boeing chief executive Dennis Muilenburg said in a conference call with reporters and investment analysts.
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July 23, 2018, © Leeham News: First mover or not first mover, that is the question.
In a pre-Farnborough Air Show interview with another publication, Airbus Group CEO Tom Enders said Airbus had the advantage of being the “first mover” by acquiring majority control of the Bombardier C Series program.
But when it comes to responding to the prospective Boeing New Midmarket Airplane (NMA, or 797), Airbus officials say they are content to wait and watch, willing to let Boeing make the first move.
At the same time, Airbus is proceeding with studies to further extend the range of the A321neo, in the form of the A321XLR. The airplane would have a range of 4,500nm, up from 4,100nm, according to information widely leaked at the air show.
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May 15, 2018, © Leeham News: The engine problems at all four OEMs mean a later entry-into-service for the prospective Boeing New Midrange Aircraft (797), says an influential figure in commercial aviation.
And the longer Boeing puts off a decision to launch the NMA, the more Airbus A321neos will be in service and the more difficult an already challenging business case for the NMA becomes, says Steven Udvar-Hazy, executive chairman of Air Lease Corp.
Hazy made his remarks at the 38th annual Airfinance Journal conference today in Miami.
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April 2, 2018, © Leeham News: Boeing’s painful experience the with the development, design, production and grounding of the 787—costing billions of dollars in overruns and penalties with a delay of nearly four years—led to a major effort to de-risk future airplane development.
The 787 experience led to a pause that resulted in pursuing derivatives of the 737 MAX and 777X instead of developing new airplanes to replace these aging platforms and leap ahead of Airbus.
Now, poised to launch its first all-new airplane program in 15 years, Boeing continues to de-risk its production.
By Bjorn Fehrm
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March 26, 2018, © Leeham News: Boeing’s NMA or 797 is taking final form ahead of a decision to essentially launch the program with an Authority to Offer (ATO), widely believed to be later this year.
In the first article, we looked at the key characteristics of the design. We also looked at the engine situation in a couple of articles.
Now we round up the series with analyzing the potential economics of the aircraft.
Summary:
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March 22, 2018, © Leeham Co.: As Boeing enters the final stretch whether to launch the New Midrange Aircraft (NMA, aka 797) market focus should shift to the engines more than the airframe and even the market demand.
It all comes down to this: no engines, no plane.
Monday’s post outlined some of the issues to consider.
But there are larger implications as well.