Pontifications: Boeing Board needs major shake-up

Jan. 13, 2020, © Leeham News: Today is David Calhoun’s first day as the president and CEO of The Boeing Co.

To say that he’s got his work cut out for him is an understatement.

By Scott Hamilton

I’ve put together a list below, which probably is only half of the important tasks at hand. Most of this list is obvious and doesn’t need any additional reporting because of all the coverage in 2019.

This column is focused on another task that should be, and in the view of many, must be done.

Boeing’s Board is preoccupied with the MAX crisis, but on the theory it can do more than one thing at a time, it need to also turn its attention to some introspection.

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Pontifications: Airbus almost certain to be hurt by MAX crisis

By Scott Hamilton

Jan. 6, 2020, © Leeham News: This may be the year that Airbus is hit with the negative consequences of the Boeing 737 MAX crisis.

Most observers see Airbus benefitting with greater A320 family sales while the MAX remains grounded.

In LNA’s 2020 Outlook last week, we pointed out that the long-running trade war between the US and European Union could be coming to a head this year. Airbus and the EU are waiting for the World Trade Organization’s authorization to impose tariffs on US products. This decision is expected in May or June. Boeing is expected to be the first target. The Trump Administration last year imposed a 10% tariff on Airbus aircraft.

The MAX crisis could ratchet up tariffs on Airbus aircraft.

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Pontifications: There was other news in 2019 besides MAX. Really.

By Scott Hamilton

Dec. 23, 2019, © Leeham News: The Boeing 737 MAX crisis clearly dominated the news this year.

It’s felt like the aviation stories have been all-MAX, all-the-time.

Believe it or not, there was aviation news other than the MAX.

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Pontifications: MAX RTS, Emirates 777X order, Suspending 737 production, more

By Scott Hamilton

Editor’s Note: News reports Sunday indicated Boeing is considering reducing or suspending production of the 737 MAX. LNA reported this possibility Dec. 11.

While Sunday’s reports suggest Boeing will halt production, LNA is told a rate cut to between 10-20 airplanes a month is also possible in order to minimize impact to the supply chain.

Dec. 16, 2019, © Leeham News: It’s time for catching up on a variety of topics.

Topics this week:

  • 737 MAX Return to Service.
  • Emirates Airline 777X order reduction.
  • Suspending or reducing 737 production—it’s not the first time.
  • E175-E2 first flight.
  • Airbus wins Project Sunrise.

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Pontifications: Stop hitting the snooze button, Boeing

By Scott Hamilton

Dec. 9, 2019, © Leeham News: I know Boeing is preoccupied right now. But it has to get off the pot and decide to proceed with a new airplane.

We believe the New Midmarket Airplane is still required. But Boeing salesmen have also floated the concept of a new, single-aisle airplane to key players in the market. Either way, Boeing has to do something.

At least, that’s how we see it at Leeham Co.

The order last week by United Airlines for 50 Airbus A321XLRs should be a wake up call.

It’s not the only one Boeing has had.

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Pontification: A320 production challenges may extend to 2022/23

By Scott Hamilton

  • Update of Boeing 737 NG Pickle Fork cracking issues.

Dec. 2, 2019, © Leeham News: Airbus sees struggles for A320 production continuing throughout next year, into 2021 and spilling into 2022/23 as the Air Space cabin is introduced on the A321XLR.

Executives also see lower margins than the target 15% for the A350 and losses on the A220 continuing into the middle of the next decade.

Even so, profit targets are expected to be met and officials still want to ramp up production rates on the A320.

This mixed picture was presented by Airbus CFO Dominik Asam during  series of investors meetings last month in Asia, arranged by Citi Research’s London office.

In a research note issued Nov. 22, Citi summarized the three days of meetings with investors in Australia, New Zealand and Tokyo.

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Pontifications: Good, and Bad, news from the Dubai Air Show

By Scott Hamilton

Nov. 25, 2019, © Leeham News: The Dubai Air Show proved to be a mixed bag for Airbus and Boeing.

Each company picked up important orders and commitments.

But each company saw some previously announced commitments reduced in the process, including, for Boeing, a reduction in the backlog for the slow-selling 777X.

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Pontifications: Observing Veterans Day

By Scott Hamilton

Nov. 11, 2019, © Leeham News: Today is Veterans Day observance in the USA. I’m going to make a rare departure from discussing commercial aviation issues to talk about the military.

I never served—my lottery number during the Vietnam era was too high and, with this unpopular war, I didn’t have a desire to join the Army. My brother had been drafted and received orders for Vietnam. On the day of his departure to the Southeast Asian country, which also happened to be his birthday, his unit’s orders were changed. They went to Stuttgart, Germany, where he served the remainder of his two year duty.

Our servicemen of that era were frowned upon because of Vietnam. I can truthfully say I did not join this view, reserving my disdain for the leadership in Washington DC.

But I did notice that as I got older, my respect for the military grew and grew.

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Pontifications: Congressional hearings on Boeing dominated by grandstanding–but damning documents revealed

By Scott Hamilton

  • Senate hearing largely theater.
  • House hearing has grandstanding, but substance, too.
  • House reveals some damning documents.
  • Muilenburg claims no knowledge of legal strategy, but top lawyer reports directly to him.

Nov. 4, 2019, © Leeham News: Last week’s Congressional hearings about the Boeing 737 MAX crisis was just as I expected: theatre, lots of grandstanding, little substance and testimony that elicited little in the way of new information.

The US Senate hearing was a perfect example of playing to the television by many Senators.

The House hearing certainly had its share, but in more lucid moments, some House members produced new documents that were especially damning to Boeing.

Boeing CEO Dennis Muilenburg and John Hamilton, VP and chief engineer, did no harm to Boeing, which was probably the prime objective. (Hamilton is no relation to me.)

Muilenburg did harm to himself, however, and some Members of Congress landed some damning blows.

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Pontifications: Southwest to evaluate splitting airplane supplier next year

Oct. 28, 2019, © Leeham News: Gary Kelly, the chairman of Southwest Airlines, told CNBC Thursday that next year, the company will review whether to source airplanes from another manufacturer besides Boeing.

This, of course, means Airbus.

The prolonged grounding of the Boeing 737 MAX is the reason. Southwest says the grounding already has cost nearly $500m in lost revenues.

Kelly said the analysis won’t be for “smaller” airplanes, but he didn’t specify to CNBC what this means.

Southwest has 500 Boeing 737-700s seating 143 passengers at 30-31 inch pitch.

The Airbus A220-300 seats 145 at 32 inches in the Air Baltic one-class configuration.

The Embraer E195-E2 seats 146 passengers, but in a 28-inch pitch. At Southwest’s preferred 31-32 inch pitch, the E-Jet seats 132 passengers.

Since the context was the 737-8 MAX, did Kelly mean, not smaller than the -8? This isn’t known.

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