Dec. 7, 2020, © Leeham News: “It’s really important that we stay in tune with the market dynamics, making the adjustments we need to do and not lose sight of the future. Which is absolutely we are not doing.”
Greg Smith, the of Enterprise Operations and chief financial officer for The Boeing Co., added, “We haven’t lost sight of the importance of making investments that are critical to the future of the business. So, when we think about future product strategy, we’re continuing to reprioritize and streamline our R&D investments to CapEx.
“When we were in pursuit around the NMA, we asked the team to step back and reassess the commercial development strategy and determine what family of aircraft to be needed for the future. And that team continues to work and they’re building off the work that we did on NMA.”
Smith made the remarks at last Friday’s Credit Suisse annual conference.
This is the second in a series of articles examining how labor, Boeing and Washington state could move forward following the COVID pandemic. The first article is here.
By Bryan Corliss
Nov. 30, 2020, © Leeham News — You might want to set yourself an Outlook calendar reminder for January 2024.
It’s going to be a pivotal year for Boeing, its home state and its workforce. By then, the company’s recovery from the current Covid-caused crisis should be underway, with the order book refilling.
The countdown should be on for the long-delayed roll-out of the reconceived NMA, at long last giving Boeing a real counter to the Airbus A321. And — barring a surge in 737 MAX orders after its return to service — Boeing could be close to making some tough decisions about the future of the 737 program, thinking hard about whether after 60 years it’s finally time to design and build a clean-sheet replacement.
Also by then, the 787 program will have fully consolidated into Charleston, and the last 747 will have departed the Paine Field flight line, leaving The World’s Largest Building (By Volume) half-empty.
Then, in January 2024, Boeing’s contract with its touch-labor union – IAM District 751 – will expire, after a 10-year extension that was part of the price Machinists paid to ensure the 777X would be assembled in Everett. For the first time since the summer of 2008, the two sides will sit down at a bargaining table with the union having the ability to call for a strike.
What happens between now and January 2024 will pretty much decide the future of Boeing in Washington state. If the players are clear-eyed and rational, we could see a return to the days when high-skilled workers built high-quality planes that created handsome profits for Boeing shareholders and family-wage jobs for Boeing workers.
By Judson Rollins, Bjorn Fehrm & Scott Hamilton
Sept. 21, 2020, © Leeham News: Commercial aviation is facing a lost decade due to COVID.
Yes, most forecasts target 2024-2025 as returning to 2019 passenger traffic and aircraft production levels.
However, LNA in July published its own analysis indicating full recovery may not occur until 2028. Breathless headlines notwithstanding, it will take years for vaccines to be widely available and considered safe by enough of the world’s population. Growing concern about vaccine production and distribution capacity through 2024 underscores this view. Even Southwest Airlines CEO Gary Kelly said earlier this month that business travel might not fully return for a decade.
Indeed, the 2020s may well be a lost decade for aircraft manufacturers and their supply chains.
By Scott Hamilton
Sept. 2, 2020, © Leeham News: Boeing is considering production changes to the slow-selling 787-8 to lower costs and boost sales.
The effort comes at a time when global passenger traffic is at record lows and recovery of international traffic is forecast to take four or five years.
As airline traffic recovers, carriers appear to be favoring smaller aircraft in restarting suspended routes.
In recent years, Boeing discouraged sales of the 787-8 because it is a low margin airplane with high production costs. This is a legacy of the program and development difficulties from 2004-2011, when it finally entered service.
The 787-9 and 787-10 are high margin aircraft Boeing counted on to reduce the billions of dollars in deferred production and tooling costs. At one time, this exceeded $32bn.
The early program difficulties resulted in the production and parts of the -8 to be substantially different than the -9/10, which have 95% commonality. The -8 was only 30% common.
Now open to all Readers.
Aug. 10, 2020, © Leeham News: With Boeing likely to consolidate 787 production in Charleston (SC), reflecting a rate of 6/mo, the future of assembly in Puget Sound rears its head again.
LNA outlined Aug. 3 why Everett is the ideal location to assemble the Next Boeing Airplane (NBA).
Boeing’s product line also requires a new airplane in the 100-150 seat sector. Airbus’ A220-100/300 and, nominally, the A320neo (but not the A319neo) fill this sector. (The A320neo was originally designed as a 150-seat airplane. It now is commonly configured in the 150-180 seat size.)
Airbus has a design for an A220-500, which could replace the A320.
Boeing needs an efficient competitor to the current A220 plus a replacement for the 737-7 and, eventually, the -8.
And it probably won’t be assembled at the Boeing 737 plant in Renton.
Now open to all Readers.
By Scott Hamilton
This is counter-intuitive, given the disaster it faces with the COVID-19 crisis.
But in chaos, there are opportunities.
There are some key assumptions that must be made. But these are not outlandish.
Second in a series.
By Scott Hamilton and Vincent Valery
June 24, 2020, © Leeham News: “Airbus’ widebody strategy is a mess.”
Today, it may be going too far to say there is increasing opinion in the industry that Boeing’s product strategy is a mess. But it’s fair to say it’s seriously challenged.
Even setting aside the 737 MAX grounding, Airbus clearly outpaced the MAX with the A320neo family. The A321LR and XLR thrust Airbus into dominance in the single-aisle, 150-220 seat sector.
Airbus fell into a winner with the acquisition of the Bombardier C Series. Boeing’s 737-7 MAX has captured fewer than 100 orders since the program launch in 2011. Demand for the 777X is weak.
Boeing critics, and there are many, see little but doom and gloom ahead. Even before the COVID-19 crisis, Boeing faced years of recovery from the MAX grounding.
There’s no doubt Boeing has a deep hole to climb out of, exacerbated by the COVID crisis. The question is, what does Boeing do after the MAX is returned to service and the virus crisis is over?
By Vincent Valery
May 11, 2020, © Leeham News: The timeline for a passenger traffic recovery is highly uncertain. Major OEMs and some airlines expect a return to 2019 passenger traffic levels in two years at the earliest.
Southwest Airlines doesn’t see traffic returning to 2019 for five years. IAG, parent of British Airways and several other airlines, predicts a three year recovery.
Leeham Co. predicts that it will take four to eight years before traffic returns to pre-COVID-19 levels.
However, the recovery sequence for the various markets is becoming clearer. Governments will progressively lift travel restrictions on domestic markets, followed by regional international. Long-haul international will probably be the last to return to normal.
Airlines in China started ramping up domestic capacity, though the government mandates some of this. The governments of Australia and New Zealand disclosed discussions to lift trans-Tasman travel restrictions. French President Emmanuel Macron made it clear that travel would be first allowed within the European Union before outside the old continent.
People who need to travel for business reasons will be allowed first, including for long-haul travel. That means airlines that wish to restore long-haul capacity will have to do so with a much-reduced demand. With this in mind, it might make sense to restore long-haul flights with latest generation narrowbody aircraft such as the Airbus A321(X)LR and Boeing 737 MAX.
LNA analyzes pre-COVID-19 long-haul route patterns to determine what fraction narrowbody aircraft can cover as passenger traffic recovers.
April 6, 2020, © Leeham News: It’s going to be quite a while before there is a clear understanding how coronavirus will change commercial aviation.
LNA already touched on impacts to Airbus, Boeing and Embraer. None of it is good. For Boeing, burdened with the additional stress of the 737 MAX, is in the worst position. Even when the MAX is recertified, there won’t be many—or any—customers in a position to take delivery of the airplane.
Bearing in mind that what’s true today will change in a day, or even an hour, let’s take a rundown of where things seem to stand now.
By Scott Hamilton
March 2, 2020, © Leeham News: NMA. NSA (version 1). NSA (version 2). NLT. FSA. MOM.
These are Boeing’s acronyms for its next airplane. Whatever it will be.
NMA stands for New Midmarket Airplane.
NSA version 1 stood for New Single Aisle Airplane. It was replaced by version 2, New Small Airplane. This was replaced by FSA, Future Small Airplane. Some called this the Future Single Aisle airplane.
Then there is NLT, New Light Twin, from 2011. Which really begot the NMA, which was initially the MOM, or Middle of the Market Airplane. We called it MOMA at times.
It’s all very confusing. The Next Boeing Airplane is such a moving target. Maybe it should be called the NBA, although some association involving basketball might object. (The Next Airbus Airplane logically would become the NAA.)
Then there is the next new airplane from Embraer, after its joint venture with Boeing is finally approved (as I believe it will be).
Embraer CEO John Slattery want to do a turboprop. So does this become the E3TP?
The JV agreement calls for Embraer (to be named Boeing Brasil-Commercial) to do the next jet in the 100-150 seat category. Does this become the E3150, E3JET, BBCX or something else?