Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
- Focus on quality not slowing innovation, says GKN April 18, 2024
- Boeing defends 787, 777 against whistleblower charges April 17, 2024
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
- Bjorn’s Corner: New engine development. Part 3. Propulsive efficiency April 12, 2024
Pontifications: Did Boeing telegraph its decision in February consolidating 787 production?
Aug. 24, 2020, © Leeham News: Did Boeing telegraph plans to consolidate its 787 production in Charleston last February?
By Scott Hamilton
That’s when Boeing announced it asked the Washington Legislature to cancel tax breaks granted in 2003 to locate what was then the only 787 production line, in Washington.
Given subsequent events in which Boeing in July said it will consider consolidating two lines into one, one must wonder if the decision is already made. There’s near unanimous conclusions by outsiders that Everett’s days producing the 787 are numbered.
When Boeing said it asked the Legislature to cancel the tax breaks, officials said it was doing so to comply with a long-ago decision by the World Trade Organization that the breaks were illegal.
The WTO has yet to agree. It’s their call, not Boeing’s whether compliance was achieved.
But what is unequivocally true is that if Boeing moved 787 production out of Washington, those 2003 tax breaks would disappear. Gary Locke, who was governor in 2003 when the Legislature approved them, told me in 2008 this was the case.
Pontifications: A330neo future bleak from COVID impact
Aug. 17, 2020, © Leeham News: At least half the Airbus A330-900 skyline is with airlines that are in administration, technically insolvent or with a politically sanctioned carrier.
By Scott Hamilton
These could be characterized as in Red Alert.
The COVID-19 crisis places the remaining orders in Yellow Alert.
Airbus, as of its July website tally, has 226 A330-900s in backlog. One hundred fourteen of these, or 50.44%, are in Red Alert.
Pontifications: No, it’s not time to fly
Aug. 10, 2020, © Leeham News: Frontier Airlines’ CEO Barry Biffle says “it’s time to fly,” reports The Points Guy.
By Scott Hamilton
Well, good luck with that.
Air fares are ridiculously cheap. Some airlines in the US continue to block middle seats and now require passengers to wear masks throughout the flight. Extra efforts are made to clean the airplanes. (Southwest Airlines, in a truly bizarre move, ceased cleaning seat belts and arm rests between flights—two things passengers are guaranteed to touch.)
Travel count in in the US is now up to about 800,000 passengers a day. This compares with nearly 3m a day pre-COVID.
I wrote July 6 why I won’t be flying any time soon. I wasn’t concerned about the airplane experience (except for those passengers who refused to wear masks). I was concerned about the experience getting to, from and at the airports and at hotels.
Now, there’s another reason why it’s not time to fly.
Pontifications: The light bulb goes on
By Scott Hamilton
July 27, 2020, © Leeham News: Airlines across the world are pledging aircraft, slots, airport facilities and real estate to raise money.
Some US airlines recently pledged frequent flyer programs to raise billions of dollars in debt to help carry them through the COVID-19 crisis.
Airfinance Journal last week had a podcast with United Airlines and Goldman Sachs to discuss UAL’s doing this and the larger picture.
The rush to pledge virtually everything to raise money is déjà vu all over again.
I’ve been in this business since 1979. I’ve been through the 1991 Persian Gulf War, SARS, downturns, 9/11 and the Great Recession. The impact to the airline and aerospace industry from the virus crisis is by far the worst.
Pontifications: Turbulence is not just something in the air
By Scott Hamilton
July 20, 2020, © Leeham News: The timing is coincidental. If you think the airline industry is in a wind shear now, don’t be fooled.
The industry has been in perpetual turbulence for 50 years.
At least that’s the theme of an airline executive’s new book, Turbulence.
David Banmiller began his career as a ticket agent, when hand-writing the coupons at the airport as common practice.
He retired three years ago after a career that saw him in executive positions at AirCal, American Airlines and other carriers.
He became a bankruptcy reorganization specialist as well.
Careers
Banmiller weaved through American, TWA, AirCal, the second Pan Am, Aloha and Air Jamaica. He was CEO of AirCal when it was sold to American, where he became an executive under legendary CEO Bob Crandall. Banmiller went on to become CEO of Aloha, Pan Am and Air Jamaica. He took the first two through bankruptcy reorganization and restructured Air Jamaica outside of the courts. He also served as CEO of Sun Country Airlines.
Throughout his careers, Banmiller experienced many of the downturns of the airline industry: oil price wars, 9/11, the SARS pandemic and now, from his retirement, COVID-19.
Pontifications: 2Q earnings reports begin this month
By Scott Hamilton
July 13, 2020, © Leeham News: Earnings season calls for the second quarter begin this month.
For our readers, Airbus and Boeing are the big ones.
Boeing’s earnings call is July 29. Airbus follows the next day.
A few early analyst previews were issued last week for Boeing.
Pontifications: Why I won’t be flying any time soon
July 6, 2020, © Leeham News: I really, really want to return to traveling by air soon. But I don’t expect to fly until next year.
By Scott Hamilton
I’m not worried about being on the airplane. As LNA’s Bjorn Fehrm detailed over a series of Friday posts, the cabin purification technology scrubs the air every few minutes.
The problem is not the airplane.
It’s the people who fly.
Here’s why.
Pontifications: Recertification flights for Boeing 737 MAX appear close
By Scott Hamilton
June 29, 2020, © Leeham News: Boeing may be set to begin recertification flights of the 737 MAX as early as today, The Seattle Times reported last week.
Testing will take three days, if all goes well. But Boeing still has a lot of work to do to fully satisfy regulators.
According to The Times, Transport Canada and Europe’s EASA require additional modifications to enhance safety on the MAX. The additional changes may not be required for certification but must be done within a year, the paper reports. The MAX 10 must have the changes before it is certified.
Pontifications: Deferrals, bankruptcies continue; order recovery far off
By Scott Hamilton
June 22, 2020, © Leeham News: Although more passengers are flowing through airports and airlines are adding back service, airplane order deferrals continue.
Airline bankruptcies do, too.
LEVEL’s short haul operation went into bankruptcy last week. LATAM Argentina ceased operations. Lufthansa said it may seek administration if shareholders don’t agree to the government bailout negotiated by the airline.
New orders dried up. And, so far, there is no telling when there might be some placed.
Boeing announced just a handful of new orders last month. Airbus didn’t announce any orders in May.
Pontifications: bleak near- to mid-term future for Rolls-Royce engine unit
By Scott Hamilton
June 15, 2020, © Leeham News: The jet engine division of Rolls-Royce faces an uncertain future because of its own problems, exacerbated by the impact of COVID-19 on commercial airlines.
Beset by problems with its Trent 1000, Boeing 787 engine, hampered by a huge error in judgment to withdraw from a joint venture with Pratt & Whitney, beset by the premature termination of the Airbus A380 program and now facing a long-term impact of the coronavirus crisis, Rolls is an engine maker with few opportunities.