Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing returns to PNAA December 5, 2023
- Pontifications: Embraer sees easing in pilot shortage, wave of sales coming December 5, 2023
- Airbus: Global services sector to double by 2042 December 4, 2023
- Harvest season at Embraer December 4, 2023
- Bjorn’s Corner: New aircraft technologies. Part 40. The initial production crisis December 1, 2023
Boeing returns to PNAA
By Scott Hamilton
Dec. 5, 2023, © Leeham News: Boeing and the Pacific Northwest Aerospace Alliance have kissed and made up.
After a two-year boycott, Boeing returns this year as a sponsor to PNAA, a suppliers-oriented trade group, and to sponsor and provide speakers to its annual conference in February. Boeing abruptly withdrew from the organization and the conference in 2022, citing a sexual discrimination lawsuit that had been filed by one of its women employees against the then executive director, a male, and the male-dominated Board of Directors. However, PNAA’s staff was predominately women and women were represented on the Board. The lawsuit was settled for undisclosed terms.
Boeing’s stated reason for withdrawal was questioned by some familiar with the background. Additionally, there has long been an occasional tense relationship between PNAA and Boeing. Analysts and consultants who appeared as speakers or panelists long criticized Boeing for its Partnering for Success program, which some viewed as brow-beating suppliers into cutting prices.
Universal Hydrogen’s first flight nears
- Universal Hydrogen nears first flight of containerized fueling concept.
- Eviation’s Alice all-electric airplane offers another option for clean skies.
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By Scott Hamilton
Feb. 27, 2023, © Leeham News: Universal Hydrogen (UH2) is just days away from the first flight of its hydrogen tank concept in a converted De Havilland Canada Dash 8-300.
The flight will be from the Grant County International Airport at Moses Lake in Central Washington State. As such, weather—which is often unpredictable here—could upset plans. So far, the forecast is favorable if cold.
UH2’s conversion removes seats from the aft portion of the passenger cabin to make way for two large tanks to install through a main deck cargo-size door cut into the fuselage. A similar approach is underway in France with an ATR-72.
The liquid hydrogen (LH2) containers are trucked from the refueling source and loaded onto the planes. Then, when near empty, these are swapped for refueling with other tanks filled with hydrogen for the next flight.
Universal Hydrogen’s concept for an H2-powered airplane centers on two fuel tanks at the aft end of the passenger cabin. This example is the ATR-72. A De Havilland Dash 8-300 is also being converted. Credit: Universal Hydrogen.
This concept solves the hydrogen supply problem at any airport. The ATR-72 capacity goes from 72 passengers to 56, a reduction of 28%. This dramatic reduction in revenue seats calls for a reset of cost and revenue per available seat mile, but for a first entry into the hydrogen field, it’s an important step in the quest for clean aviation. LNA believes that UH2 has the most viable hydrogen concept of all at the moment because the company addresses the hydrogen supply problem without the billions of dollars needed for airport infrastructure and pipelines.
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Moses Lake is the same airport used by Eviation for the first flight last year of its Alice electric aircraft. Its CEO, Gregory Davis, outlined the Alice concept at this month’s annual conference of the Pacific Northwest Aerospace Alliance (PNAA).
The pros and cons of Boeing launching a new airplane program sooner than later
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By Scott Hamilton
Feb. 23, 2023, © Leeham News: Many, outside of Wall Street analysts and stockholders, are critical of the decision by Boeing CEO David Calhoun to suspend the development of a new airplane. It will be the middle of the next decade before the company “introduces” a new one.
The view from this month’s Pacific Northwest Aerospace Alliance (PNAA) Conference is split. Speakers like Kevin Michaels and Richard Aboulafia, both from the consultancy AeroDynamics Advisory, favor launching a new airplane program sooner than later. So does aerospace analyst Ron Epstein of Bank of America. He’s a rarity among Wall Street analysts.
While Calhoun pointed to the lack of step-change engine technology as the reason to suspend any development today, LNA previously pointed out that Boeing simply may not be ready internally. Production of the 737 MAX remains challenging and somewhat erratic. The 787 is ticking along at a mere one-half airplane a month. Certification of the 737-7, 737-10, and 777X have yet to be achieved. Boeing’s debt remains in the tens of billions of dollars; about $5bn in due this year alone.
And then there is the supply chain. It’s simply not ready, either. It’s struggling with materials and labor shortages. Some laborers are new and inexperienced. Even Airbus continues to struggle to make its delivery targets. It fell short last year by a wide margin and in January delivered only 20 airplanes.
Calhoun would have had better messaging on these points rather than simply saying technology isn’t advanced enough yet (which is only partly true). Critics may have been more easily persuaded.
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Pontifications: Ihssane Mounir’s big challenge at Boeing
By Scott Hamilton
Feb. 14, 2023, © Leeham News: Ihssane Mounir was named senior vice president of Global Supply Chain and Fabrication for Boeing Commercial Airplanes (BCA). Appointed in December, he previously was the top salesman for BCA.
Ihssane Mounir. Credit: Boeing.
Mounir has a huge challenge ahead of him that goes beyond managing the logistics of BCA’s huge supply chain. He faces an irate group of suppliers who are increasingly openly angry. Some border on open rebellion.
As LNA reported last week, suppliers at the Pacific Northwest Aerospace Alliance (PNAA), some suppliers on the sidelines of the conference openly complained about Boeing’s lack of transparency and reliability. Some vowed to reduce their exposure to Boeing or even abandon working with the company. As always, Boeing’s Partnering for Success program—a long-running cost-cutting effort that demanded suppliers cut costs or be terminated—was another complaint.
Some who also supply Airbus but have to trim costs for it as well nevertheless praised Airbus’ gentler, collaborative approach vs Boeing’s threatening tactics.
The latter is relevant for some of the panelists.
Aerospace supply chain needs capital, which isn’t always easy to find–and it may be expensive
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By Scott Hamilton
Feb. 13, 2023, © Leeham News: The aerospace supply chain is still struggling to recover from the grounding of the Boeing 737 MAX, the suspension of deliveries of the 787, the delays to the Boeing 777X, and the COVID pandemic.
Labor shortages and workforce quality/experience is also a challenge for the supply chain.
Profits remain elusive and capital is available at high interest rates, if at all. CFM, GE, Pratt & Whitney, and Rolls-Royce continue to face technical challenges with their engines. The CFM LEAP and PW Geared TurboFan engines have durability issues and must be taken off wing for maintenance and warranty work at a fraction of the time their predecessor engines were on wing.
It’s a rather bleak picture painted of the state of the aerospace industry during the annual conference of the Pacific Northwest Aerospace Alliance (PNAA) last week in a Seattle suburb.
Summary
- Suppliers need capital; Boeing should return to 30-day payment terms for immediate capital injection.
- Recovery not over, suppliers can make better investments in defense.
- Without a new airplane, there’s no reason for suppliers to invest in commercial.
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.”
Pontifications: The soup du jour
March 14, 2022, © Leeham News: You might call it the soup du jour.
By Scott Hamilton
EcoAviation is all over the place at aviation conferences these days. It was a key topic at last October’s Annual General Meeting of the International Air Transport Association (IATA). Likewise at last month’s annual conference of the Pacific Northwest Aerospace Alliance (PNAA). EcoAviation also was an element of the Speed News conference in Los Angeles early this month and at another event the following week. Investor Day events now routinely include ecoAviation discussion.
This is all well and good, but at last, some key members of the industry are putting caution and realism to the pie-in-the-sky stuff that is sucking up investment like the Dot Com era a few decades ago. Only a few ideas and technologies will be successful.
Airbus readies hydrogen-powered demo flights
Update, Feb. 21: Airbus announced today a press conference tomorrow in Toulouse.
By Scott Hamilton
One concept of where hydrogen tanks could be located.
Feb. 8, 2022, (c) Leeham News: Airbus plans to fly a hydrogen-fueled ZEROe demonstrator soon, with an announcement coming as early as this month.
Airbus’ drive to reduce emissions appears prioritized toward developing an H2-fueled airplane. While all it’s A-Series aircraft will be 100% compatible with Sustainable Aviation Fuel (SAF) by 2030—they’re 50% compatible today—hydrogen is at the forefront of its research and development. Officials want to have an H2-powered airplane ready for service by 2035. This aircraft will almost certainly be a turboprop.
Amanda Simpson, vice president for research and technology of Airbus, said the company must have a demonstration project proving the feasibility of an H2-fueled airplane before full development can proceed. She told the audience at the annual conference of the Pacific Northwest Aerospace Alliance yesterday that an announcement could come within two weeks. In sideline remarks, she declined to say what type of aircraft will be used for the demo project.
Boeing helps some suppliers, but squeezes others
By Scott Hamilton
Feb 19, 2020, © Leeham News: Boeing says it is helping some suppliers with liquidity while the 737 MAX is grounded.
Other suppliers complain that Boeing is dunning them for alleged bad workmanship, squeezing cash. Still others say Boeing proposes not paying them for MAX parts until every regulator in the world recertifies the airplane. There are some 80 regulators who have to approve restoring the MAX to service.
And one Tier 1 supplier, Leonardo, sued Boeing Dec. 23 for withholding $20m in payments for 767 slats. Boeing alleges faulty workmanship. 
Leonardo says Boeing won’t provide documentation of this claim.
(US District Court for Western Washington, 2:19-cv-02082-JLR.)
Boeing’s tactic of withholding payments for claims against future invoicing was echoed by some of the suppliers attending the annual conference of Pacific Northwest Aerospace Alliance Feb. 4-6. Some complained Boeing is using them for its “bank.” It’s a complaint of long-standing even if for different reasons.
Pontifications: In chaos there is opportunity for Boeing during MAX grounding
Feb. 17, 2020, © Leeham News: Boeing executives said that while the 737 MAX production is suspended, efficiencies are being implemented on the assembly lines.
By Scott Hamilton
At a Cowen & Co. conference last week, EVP and CFO Greg Smith outlined some of the efficiencies that are being put in place.
But another area that could be improved, not addressed by Smith, while the lines are shut down is supply chain tracking. This has huge ramifications for cost savings and streamlining. It’s part of the business plan for the next new airplane, whatever this is.
This process is called ERP, or Enterprise Resource Planning. Boeing is transitioning to a more advanced method, called SAP, or Systems Applications Projects.
Boeing Australia and Boeing Global Services have made the transition. But Boeing Commercial Airplanes’ transition is stalled due to middle management inertia, said several people who attended the Pacific Northwest Aerospace Alliance annual conference Feb. 4-6.
Boeing should use the production halt and slow ramp up to implement SAP, they said.