Pontifications: Why I’d fly the MAX; lessons learned and still to come

Nov. 23, 2020, © Leeham News: I’m okay with flying on board the Boeing 737 MAX.

Yes, it’s gone through the wringer in the 20 months since it was grounded.

Yes, Boeing and the US Federal Aviation Administration screwed up royally.

And yes, there’s solid reason to distrust the company and the agency, wondering if they got it right this time.

Which is why for me the tipping point is the involvement of Transport Canada and Europe’s EASA are the reasons to trust getting back on the MAX.

LNA addresses the safety in our new podcast feature, 10 Minutes About. The inaugural podcast, 10 Minutes About the Boeing 737 MAX recertification may be heard here.

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Pontifications: EU tariffs on Boeing airplanes in effect; ~60 at risk

Nov. 16, 2020, © Leeham News: The European Union implemented tariffs Nov. 9 on Boeing and other US products in retaliation for the Trump Administration tariffs on Airbus and EU products.

By Scott Hamilton

This is the latest in the 16-year trade battle between the US and Europe over subsidies and tax breaks found to be illegal under World Trade Organization rules.

The US was authorized last year to impose tariffs on Airbus and other EU products. The Trump Administration initially imposed a 10% tariff on imported Airbus aircraft. A320/321s assembled at Airbus’ Mobile (AL) plant were exempt, even though major components were imported.

Trump increased the tariffs to 15% in March, just as the COVID-19 pandemic erupted worldwide. As a result, few Airbus airplanes were delivered into the US since then.

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Pontifications: Aircraft prices, rents plunge

By Scott Hamilton

Nov. 9, 2020, © Leeham News: Aircraft prices and lease rates are plunging as the COVID-19 pandemic continues to devastate the airline and manufacturing industries.

The Australian newspaper reports that Rex Airlines will pay A$60k/mo for its ex-Virgin Australia Boeing 737-800s, rising to A$100k after 12 months. This is US$43,600 to US$72,700.

Rex is a small regional airline that is leaping to a jet operator. It committed to take 10 737s.

The article says the airplanes are more than 10 years old.

Compare the rates to the rents listed Nov. 2 by Ishka, the UK-based appraisal and consultancy firm: US$115k/mo for a 15-year-old model.

Virgin’s airplanes date from 2003 to 2018. The oldest leased airplanes date to 2004.

It’s not especially surprising that swamped with excess airplanes that lessors will place airplanes for whatever they can get. Lessors are under great pressure to service their own debt.

Even Ishka’s estimates for 20-year old airplanes are higher than the Rex rates.

But the real story is what new airplanes are going for. And the prices are eye-popping low.

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Pontifications: Certification timing may push EIS for 777X

Nov. 2, 2020, © Leeham News: Throughout the 737 MAX investigations and recertification process, former Boeing CEO Dennis Muilenburg said there would be no delay on 777X certification.

By Scott Hamilton

On Boeing’s earnings call last week, Muilenburg’s successor, David Calhoun, said there could be.

“On the 777X, we continue to work with the regulators on certification work scope, including reflecting the learnings from the 737 cert process,” Calhoun said. “As with any development program, there are inherent risks that can affect schedule. And while we continue to drive toward entry into service in 2022, this timing will ultimately be influenced by certification requirements defined by the regulators.”

Boeing is certifying the 777X under the Changed Product Rule, the same process used for the MAX. Certification is being pursued as a derivative of the 777, a point of scrutiny on the MAX.

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Pontifications: Earnings previews Airbus, Boeing; Watching Mitsubishi

By Scott Hamilton

Oct. 26, 2020, © Leeham News: It’s earnings call week for Boeing and Airbus.

And Mitsubishi Heavy Industries is said to plan an announcement “freezing” development of the SpaceJet.

Let’s preview these events.

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Pontifications: Boeing’s latest forecast raises more doubt than hope

By Judson Rollins

Oct. 12, 2020, © Leeham News: Every year, like clockwork, when Boeing publishes its 20-year Current Market Outlook, there is always another upward revision in forecast demand for new aircraft.

So, when the Chicago-based OEM admits that demand has taken a long-term hit, you know the situation must be dire.

Last week, Boeing belatedly published its annual CMO forecast for global commercial jet production and services. The forecast was quite a comedown as it marked a 2% fall from Boeing’s previous expectations for aircraft demand, with a whopping 10% drop for widebodies and freighters.

Airbus has withheld its 2020 Global Market Forecast while it continues to assess the impact of COVID-19. Read more

Pontifications: Boeing works on green aviation initiatives

By Scott Hamilton

Oct. 5, 2020, © Leeham News: Even as Boeing works its way through the final days of the 737 MAX grounding and how to survive the COVID-19 crisis, it’s working on greener aviation.

LNA already reported how Boeing views the prospects of hydrogen, hybrid and electric power. Another article discusses Boeing’s work in disinfecting airplanes to combat COVID.

Here are some other areas Boeing is working on.

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Pontifications: Winter is coming

By Vincent Valery

Sept. 28, 2020, © Leeham News: The end of September marks the time when airlines in the Northern Hemisphere assess their summer season financial performance. Depending on the outcome, they adjust their capacity and evaluate their cash needs to see through the lower demand winter months.

This summer was significantly different from what airlines envisioned earlier this year. They had to re-arrange schedules on short notice to capitalize on the uptick in passenger demand after the lifting of some travel restrictions put in place during Spring.

With a resurgent COVID-19 spread in some countries and the re-establishment of movement restrictions, airlines need to, once again, adjust their plans for winter months.

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Pontifications: Boeing SC makes its case for 787 production consolidation—and it favors Everett

By Scott Hamilton

Sept. 14, 2020, © Leeham News:  Boeing’s South Carolina 787 final assembly plant has made its case whether to consolidate production in one location, or not.

The conclusion favors retaining dual assembly lines, retaining one in Everett.

This click-bait lead doesn’t mean Boeing SC management favors retaining dual assembly lines. Far from it.

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Pontifications: Boeing in Washington: Here We Go Again

By Bryan Corliss

Sept. 7, 2020, © Leeham News: Stop me if you’ve heard this one: the pundits are saying Boeing is going to leave Puget Sound, leaving behind the hollow husk of a company doomed to wither and die on the vine.

Bryan Corliss

Just like they did in 2003, in 2009, in 2013 and 2016.

Seattle-area political economist and author T.M. Sell, in fact, traces the company’s first threat to leave clear back to the 1920s, when company executives got into a fight with the Seattle City Council over building new roads to connect downtown with the airport we now call Boeing Field. 

Boeing said it would pack up and move to southern California, if Seattle didn’t cooperate. 

“Like rain in winter, this is a regular feature of the Puget Sound emotional landscape,” Sell opined back in 2009.

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