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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Pontifications: To no surprise, MAX was major topic at 3 NYC events

  • Media, Twitter go mad over text messages.
  • Recertifying MAX now looks like December or January.
  • Boeing’s initial compensation offers.

By Scott Hamilton

Oct. 21, 2019, © Leeham News: New York: The grounding of the Boeing 737 MAX was expected to be a hot topic of conversation on the sidelines of the Wings Club event here Friday as well as two aviation conferences in town at the same time.

And it was.

How long would the grounding last? What’s the long-term impact on MAX values? How many cancellations might there be?

And then the media frenzy began and the Twittersphere went wild.

Reuters reported that a pilot at Boeing experienced, in 2016—two years before the Lion Air crash—the symptoms of a runaway MCAS in a simulator.

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Pontifications: Muilenburg loses chairman’s title; are his days numbered?

By Scott Hamilton

Oct. 14, 2019, © Leeham News: Look for Boeing CEO Dennis Muilenburg to leave in 2020.

At least this is my view.

But some aerospace analysts I spoke with over the weekend are split. Some believe Friday’s action by the Boeing Board of Directors “stripping” (as most media headlines and stories positioned it) the chairman’s title from Muilenburg, while his retaining the president and CEO titles, is the first step in easing him out the door next year. This is my view, too.

Muilenburg also remains on the Board.

Others think handing the non-executive chairman’s title to lead director David Calhoun is actually an effort to save Muilenburg’s job.

Here’s the divergent thinking. None of the analysts wanted to be identified because by investment bank policy, their remarks hadn’t been cleared for quotation and none had yet issued research notes in reaction.

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Pontifications: Muilenburg’s departure wouldn’t go far enough

By Scott Hamilton

Oct. 7, 2019, © Leeham News: A recent call for Boeing CEO Dennis Muilenburg by my friend Ernie Arvai to resign or be removed has a litany of woes at the company that occurred under the CEO.

These mostly relate to the 737 MAX crisis, but also include the policy of returning free cash flow to shareholders rather than investing in new airplanes. Other issues are also cited.

Arvai makes many good points, but he doesn’t go far enough.

If Muilenburg deserves to go, so does Greg Smith, the Chief Financial Officer and Executive Vice President, Enterprise Performance & Strategy.

The emphasis on cost control, which have become part of the focus of the MAX development, emanates from Smith. The strategy for new products ultimately falls under Smith, who vehemently opposes investment in the New Midmarket Airplane.

If these two deserve to go, so do the Board of Directors.

It’s the Board of Directors who set the shareholders’ value policy that Muilenburg carries out.

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Pontifications: Montreal facility is the next step for SpaceJet program

By Scott Hamilton

Sept. 23, 2019, © Leeham News: Mitsubishi Aircraft Corp (MITAC) last week opened a new office facility in Montreal intended to initially support certification of the M90 regional jet and participate in the development of the M100 and M200 follow-on airplanes.

The M90 entry-into-service is targeted for next year.

Japan’s regulatory agency, JCAB, hasn’t certified a new airliner since the turbo-prop YS-11 of the 1960s. Japan’s aerospace industry developed several military aircraft, but none of these required civilian certification.

Alex Bellamy, the chief development office of the M-Series program, called SpaceJet, said, “The development of this [Montreal] center is the last of the piece of the puzzle” to certify the M90 and advance what was originally known as the MRJ program.

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Pontifications: Spirit Air reveals new seats at Apex

By Scott Hamilton

Sept. 16, 2019, © Leeham News: Los Angeles—Spirit Airlines, a US ultra-low-cost carrier, is upgrading its passenger seating experience, the airline’s CEO announced last week at the Apex Expo 2019 event.

Ted Christie unveiled new designs for its Big Front Seat—Spirit’s version of First Class—and coach seats that are ergonomically designed and intended to add more room and redefine how seats are measured.

The Big Front Seat appears little different than the previous version—more padding seems to be the main feature.

But the changes to coach seating, where most people fly, are billed to have the potential to make a big difference compared with the ever-slimmer, increasingly uncomfortable seats offered by many suppliers and installed on most airlines.

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Pontifications: Next few weeks critical to aerospace industry

By Scott Hamilton

Sept. 9, 2019, © Leeham News: Reports increased last week that Europe’s EASA safety regulator may go its own way in recertifying the Boeing 737 MAX.

The head of IATA, the international trade group, and CEOs of several airlines and one lessor expressed fear and concern EASA won’t act with the Federal Aviation Administration to lift grounding orders of the MAX.

At the Regional Airline Assn. annual conference last week, buzz among journalists focused on one unverified report, based on EASA’s doubts reported during the week yet to hit the media, could significantly extend the grounding—measured in months, not weeks.

I know efforts are being made to verify the information.

If true, the effects would be devastating.

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Pontifications: Catching up on Odds and Ends-Alaska’s Airbus fleet, first E195-E2 delivery, Boeing’s MAX rebranding question

  • Take our Boeing 737 MAX rebranding poll at the end of this post.

Sept. 2, 2019, © Leeham News: It’s time to catch up on Odds and Ends.

Alaska Airlines

In its second quarter earnings call and 10Q Securities and Exchange Filing, Alaska Airlines said it was returning one Airbus A319 and two A320s off lease this year and next.

By Scott Hamilton

These airplanes are from its Virgin America acquisition, which introduced the Airbus family into the all-Boeing Alaska mainline operations.

Alaska officials have said several times they are evaluating whether to phase out all Airbuses and return to an all-Boeing fleet, or keep the Airbuses and operate a mixed fleet indefinitely.

I wondered if this was the start of the phase out.

“We are planning to return 1 A319 this year and 2 A320s next year at normal lease expiration,” Brandon Pederson, EVP and CFO of the company, wrote LNA.  “This is not part of a broader fleet  decision, nor a phase out of the smaller Airbus aircraft.  Leases on the remaining 50 A319/A320 aircraft in the fleet have varying maturities through 2025.”

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