Pontifications: Tombstone mentalities and Fantasy Land

By Scott Hamilton


By Scott Hamilton

April 30, 2024, © Leeham News: David Calhoun, the CEO of The Boeing Co., put this right at the top of an employee message and the 1Q2024 earnings call last Wednesday:

“Since Jan. 5, more than 70,000 of you have participated in Quality Stand Downs across more than a dozen Boeing sites. From those, we’ve received more than 30,000 ideas on how we can improve. And this year, we’ve seen more than a 500% increase in employee Speak Up submissions compared to 2023. We are taking all ideas collected and prioritizing them as we further enhance our factory disciplines and overall quality standards. Our people know better than anyone the actions we must take to improve, and we are listening and acting on their feedback.”

It’s obviously a statement intended to assure everyone interested in Boeing that it’s taking positive steps to increase safety protocol and listen to employees.

I had two reactions.

First: Why was this necessary? Supposedly after the 2018-19 737 MA X crisis, Boeing upped its safety protocols, its employee Speak Up program, and it was forced into a new relationship with the Federal Aviation Administration (FAA).

The Jan. 5, 2024, accident involving Alaska Airlines flight 1282 made it crystal clear that the post-2019 MAX crisis changes were largely window dressing.

Second: Reading Calhoun’s statement reminded me of a long-held axiom in commercial aviation of what’s derisively called the Tombstone mentality. This is tied to the belief that the FAA doesn’t take drastic safety action until after someone dies in an accident.

Unfortunately, recent history renders this parallel to The Boeing Co.

Sadly, failure to assure safety is indeed Boeing’s No. 1 priority will go down as David Calhoun’s legacy as CEO of The Boeing Co.

Related articles:

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Pontifications: Boeing “transparency”–not so much.

By Scott Hamilton

April 9, 2024, © Leeham News: “Since [Aircraft Certification, Safety, and Accountability Act] ACSAA became law, Boeing has supported implementation of the legislation, including providing full transparency for the FAA’s expert review panel in its evaluation of our safety culture and other safety measures,” Boeing said in a statement responding to questions from The Seattle Times. “Over the past several years, we’ve taken a number of significant actions to strengthen our safety practices and culture. (Emphasis added.)

“We put safety and quality above all else, and continue to make significant changes to our culture, production and processes as we strive to improve.”

I couldn’t believe my eyes when I read this in the second major front page article by The Seattle Times dissecting how Boeing has become an industrial embarrassment.

Make no mistake. I want Boeing to be a healthy, thriving company. Commercial aviation needs a healthy Boeing to compete with a healthy Airbus. As a reporter and commentator, I want to balance the negatives with the positives. But since the 2018-2019 MAX crisis, there has been little positive to find about Boeing to write or say.

The reason I couldn’t believe my eyes with Boeing’s statement above, referring to the Federal Aviation Administration’s Expert Panel, is buried within the 50 page report. It also is at variance with decades of my experience, and that of other journalists, in dealing with Boeing.

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Pontifications: “Boards are invested in their C.E.O.s until they’re not.”

By Scott Hamilton

March 12, 2024, © Leeham News: Loss of confidence in Boeing’s leadership from its customers is growing, according to industry sources.

It’s not just with the leadership at Boeing Commercial Airplanes (BCA), where CEO Stan Deal is under increasing pressure to fix a growing number of problems. Leadership at the corporate level of The Boeing Co. is also losing confidence from airlines and lessors.

Some airlines and lessors, most of whom want to remain anonymous to speak freely, want the departure of David Calhoun in addition to Deal and others in top leadership. In the past, most fingers were pointed at Deal and the leadership of BCA.

An increasing number of customers want Calhoun, the CEO of The Boeing Co., and others in the corporate leadership, also gone.

Tim Clark, the president of Emirates Airline, publicly criticized Boeing leadership many times. But he’s always avoided naming names in the public domain.

Michael O’Leary, the CEO of Ryanair, was not so reticent. Many times, he’s criticized the leadership of “Seattle” (a thinly veiled reference to Deal and his key people). But O’Leary generally defended Calhoun.

The latest series of Boeing anomalies and delivery delays prompted more customers to privately call for sweeping changes.

And, the New York Times reported that the six-week audit by the Federal Aviation Administration (FAA) found Boeing failed to follow proper procedures 37% of the time.

What happened to all the pledges by Boeing to improve safety after the 2018-19 MAX crashes that killed 346 people?

The buck stops with the CEOs of Boeing Commercial Airplanes and The Boeing Co.

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Airbus should tread carefully

  • Airbus announces is 2023 earnings on Feb. 15.

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 By the Leeham News Team


Feb. 12, 2024, © Leeham News: United Airlines has reportedly been looking to Airbus to replace the Boeing 737 Max 10s that Boeing is having difficulty delivering, due to the Alaska Airlines accident and the resulting delays in certification to the Max 7, Max 10 & 777X programs. Airbus has been searching for ways to recover/create slots to take on a premium customer and poach them from Boeing.

A320 production rates are headed towards 75 a month in the 2025/2026 time frame, with Airbus confident that its supply chain can meet the demand and will commit to the rate for the long term. These are record production numbers with the previous high-water mark reached in 2019 with 863 total deliveries: 642 of those from the A320neo family, or 54 a month. The A220 program is also headed for an increased production rate of 14 a month at about the same time.

However, Airbus has its own kinks to work out, along with concerns outside its control:

  • Geared Turbofan (GTF) on wing engine issues from supplier Pratt Whitney.
  • The A220 & A330Neo lines aren’t selling as well as they’d like to
  • 2024 US presidential election could really upend the apple cart.
  • Another Max accident would be a bad thing, even for Airbus (more below).

There has been speculation and calls for Airbus to push the envelope even more, reaching 90 a month to offset the Boeing shortcomings.

75 & 14 a month are already huge goals and pushing suppliers to go past those targets might compromise quality. People will cut corners when they are greedy. Besides, a little scarcity when you are the top dog isn’t the worst thing; Boeing isn’t coming to the party with anything new in the near future.

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Pontifications: It’s been five years since Boeing’s last normal year. Five more to go.

Feb. 6, 2024, © Leeham News: Think about it.

The last normal year for The Boeing Co. was 2018—five long years ago.

By Scott Hamilton

At best, we think the next normal year may be 2028. Another five long years. And that’s if nothing else goes wrong within Boeing’s control. This is a big IF, given Boeing’s penchant for self-inflicted wounds in recent years.

It used to be that Boeing was considered the gold standard of aerospace engineering and production. This badge of honor went away with the 787, beginning in 2003—21 long years ago. The 787 was an engineering marvel. But it was an execution and production snafu of historic proportions.

The benign neglect by the executive C Suite at the group level and the Board of Directors of Boeing Commercial Airplanes is a corporate scandal of epic proportions. It so mimics what happened to the Douglas Aircraft Co. (DAC) by the benign neglect of its parent, the McDonnell Douglas Corp. (MDC) that it’s scary.

2018 was the last normal year The Boeing Co. has had. The 737 MAX was grounded in March 2019 and Boeing hasn’t recovered yet. Source: The Boeing Co.

The McDonnell Co. acquired DAC in 1967 in an arranged marriage by the government as DAC was on the brink of bankruptcy. In 1967, Boeing and DAC were the US duopoly that Boeing today shares with Airbus. The latter was formed in 1970 and delivered its first airplane in 1974.

By the time Boeing and MDC merged in 1997, DAC’s global share was down to 7%. Airbus and Boeing gained share as MDC starved DAC for development of new airliners.

Today, Boeing’s backlog share in the single-aisle sector is between 35% and 38%, depending on the measuring point and whether China’s COMAC, Russia’s United Aircraft Corp., and Embraer’s E195-E2 are included in the numbers. Some believe Boeing is headed for a 30% share. Some believe Boeing has designed its last all-new airliner.

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Pontifications: Boeing turns to US Navy Admiral for second time in MAX crises

Special Coverage of the Boeing crisis

Jan. 23, 2024, © Leeham News: When in trouble, Boeing turned to a retired US Navy Admiral for the second time.

By Scott Hamilton

Last week, CEO David Calhoun announced that Adm. Kirkland Donald was named as special advisor to Calhoun. “Donald and a team of outside experts will conduct a thorough assessment of Boeing’s quality management system for commercial airplanes, including quality programs and practices in Boeing manufacturing facilities and its oversight of commercial supplier quality,” Boeing said in a statement.

It’s the second time Boeing turned to an admiral in connection with 737 MAX crises. In September 2019, the company turned to one of its Board of Directors members, Adm. Edmund Giambastiani, to head a new board-level safety committee to review a plethora of safety items in Boeing Commercial Airplanes. Then-CEO Dennis Muilenburg asked the Board the previous April to establish a Board committee to review Boeing’s safety practices and recommend next steps.

At the time, the MAX had been grounded for six months, with no end in sight. (Another year and two months would pass before the Federal Aviation Administration recertified the MAX.)

Donald and Giambastiani came from the nuclear navy, where safety measures are among the world’s best. Since the creation of the nuclear navy, there have been only two instances where ships were lost—and neither of them was directly related to nuclear power.

The submarine USS Thresher was lost on a test dive in 1963. The submarine USS Scorpion was lost in 1968. The Thresher’s loss was traced to disastrous flooding at a depth from which the sub could not overcome the flooding to surface. The Scorpion’s loss remains controversial to this day. Some believe it was sunk during the Cold War by a Soviet submarine. Others believe a torpedo suffered a “hot run” accident in the torpedo room and blew up before it could be disarmed.

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Pontifications: Pope, the enigma

Editor’s Note: This is the final week of 2023 scheduled publications for LNA. Our usual posts this week will appear on Thursday and Friday. Then we’re taking the Christmas-New Year’s week off and will resume posting on Jan. 2, 2024, provided there is no breaking news of importance during the holidays.

Dec. 19, 2023, © Leeham News: Naming Stephanie Pope to the new position of EVP and COO of The Boeing Co. raises more questions than it answers.

By Scott Hamilton

Stephanie Pope. Credit: Pope’s Linkedin.

Pope was CEO of Boeing Global Services, the only company unit currently making a consistent profit. She was named to the new corporate-level post on Dec. 11. She immediately became the favorite to succeed president and CEO David Calhoun. Calhoun, 66, was given an extension of up to five years from Boeing’s mandatory retirement age of 65. Some press reports suggested Calhoun may retire in the next year or two.

Stan Deal, the CEO of Boeing Commercial Airplanes, and Brian West, the corporate CFO, were said to have been in contention for Calhoun’s job. But Deal, who is also an EVP of The Boeing Co., is 59. At this age, any elevation to corporate CEO was a long shot at best. Calhoun brought West into the CFO position in August 2021. He’s 54, which could have given him 10 years as CEO if Calhoun steps down next year. Pope, at age 51, has four years to age 55 and then 10 years to be CEO.

In four years, Calhoun will be 70—the outside age the Board of Directors gave him with the extension.

Why Is all this timeline business relevant? Here’s why.

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Pontifications: Embraer sees easing in pilot shortage, wave of sales coming

By Scott Hamilton

By Scott Hamilton

 Dec. 5, 2023, © Leeham News: Embraer officials see the pilot shortage easing in 2025 or 2026.

Francisco Gomes Netos, CEO of the Embraer group, said during a media briefing last month that the “situation” is getting better. Boeing, in its latest 20-year forecast, reported that 649,000 pilots will be needed globally over the next 20 years.

With a wave of pilot retirements, especially in the US, coming in the next few years, the shortage and demand seem daunting.

“In our internal market intelligence, I would say that the situation should be much better in 2025 and 2026. We see the situation improving,” Gomes said.

The biggest impact of the pilot shortage was on the 50-seat regional jet, CFO Antonios Carlos Garcia said. The majors want 76-seat aircraft.

Orders for Embraer’s E-Jet E2 have been slow. Because the E175-E2 exceeds the weight limit in the labor contracts, known as Scope Clauses, this model isn’t sold in the US, the biggest market for the 76-seat aircraft, and for Embraer.

The E190-E2 is an “in-between” aircraft that isn’t selected by many customers. The largest of the family, the E195-E2, has a backlog of a few hundred aircraft. But Embraer hasn’t been winning orders of the magnitude Airbus and Boeing are winning.

Gomes believes the E2’s day is coming. “It’s coming, the wave to focus on our segment.”

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Pontifications: Airbus ponders A330neo MRTT, Boeing ponders KC-46A re-engine

By Scott Hamilton

By Scott Hamilton

Nov. 28, 2023, © Leeham News: In a reversal of intent, the airplane that Airbus may submit to the US Air Force for the next round of aerial tanker procurement may be based on the A330neo instead of the current production A330-200ceo MRTT.

The Air Force, however, may forego competition between Airbus and Boeing and place a sole-source follow-on order with Boeing for the KC-46A tanker, based on the 767-200ER. Boeing already has a contract for 179 KC-46As, and the USAF appears to be leaning toward a sole-source award. Political pressure from Airbus partisans and others who favor competition may prevail.

Related articles

Airbus wants to discontinue production of the A330-200ceo-based MRTT. The neo-based version would be based on the A330-800. Sales of the -800 are poor—fewer than 20 have been ordered. An -800 based MRTT will breathe life into the nearly still-born model.

  • Boeing considers re-engining the 767-300ERF and the KC-46A.
  • KC-46A, 767-200, A330 MRTT exempt from 2027 ICAO standards.

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Pontifications: IAM 751 gearing up for Boeing contract talks in 2024

By Scott Hamilton

Sept. 19, 2023, © Leeham News: It’s September 2023, one year ahead of the expirations of the current labor contracts between Boeing and its touch labor union, IAM 751. (The contract with the engineers union, SPEEA, expires in 2026.)

The IAM district, whose members assemble all Boeing airplanes in Washington State, fired a warning shot across Boeing’s bow last week. It wasn’t the first.

751 urged its members to begin saving money in anticipation of a strike in September 2024. That was three years ago.

The strike fund information appeared in the 751’s March 2020 newsletter, Aero Mechanic. The same issue had commentary about the new pandemic. At that point, nobody thought the pandemic would last two years.

Boeing was already in trouble then. The 737 MAX had been grounded since March 2019. There was no end in sight when the grounding would end. Suspension of the 787 deliveries, for what became 20 months, was still another half-year away.

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