Pontifications: There are numbers, and there are numbers

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By Scott Hamilton

March 7, 2016, © Leeham Co.: The public relations battle between Airbus and Boeing was on full display at the annual conference last week of the International Society of Transport Aircraft Trading (ISTAT) in Phoenix (AZ).

As usual, the respective officials of the two companies used numbers to make the case that their airplanes sold more than the other guy.

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Pontifications: Tax breaks in Washington State

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By Scott Hamilton

Feb. 22, 2016, © Leeham Co.: A group of Democratic legislators in Washington State will introduce five bills aimed at repealing some tax breaks and also taking yet another run at holding Boeing’s feet to the fire by tying jobs and tax breaks. The latest effort died in committee this year. This is the second year in a row by Boeing’s two key Washington unions, SPEEA (engineers) and the IAM 751 (touch labor) to get a bill out of committee to tie jobs to tax breaks. Boeing opposes the effort.

Most of the bills relate to non-aerospace industries. Two, however do:

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Pontifications: Gifts that keep on giving

Feb. 15, 2016, © Leeham Co. In the news business, it’s called the gift that keeps on giving.

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By Scott Hamilton

These are news stories on topics that just won’t go away. And we get to write about them over and over and over and over. And then we get to write about them some more.

For most of the decade of 2001-2009 and into 2011, we journalists got to write about the USAF aerial refueling tanker scandal and procurement process. First, Boeing struck a deal to lease 100 KC-767s to the USAF. This deal blew up like an IED in late 2003 when Sen. John McCain (R-AZ), who sat on the US Senate’s powerful Armed Services Committee, challenged the fiscal responsibility of the deal. His investigation uncovered improprieties. A former USAF procurement officer who was hired by Boeing after the contract award went to jail. So did the CFO. And Boeing CEO Phil Condit resigned, giving us as his successor former McDonnell Douglas CEO Harry Stonecipher. (This later became story in its own right.)

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Pontifications: Dissecting Boeing’s 2016 delivery guidance

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By Scott Hamilton

Feb. 8, 2016, © Leeham Co.: Boeing’s surprise guidance for 2016 for fewer deliveries on the 737 and 767 lines raised as many questions as officials answered on the Jan. 27 earnings call.

The lower guidance led to about a 9% drop in stock, from $128 to $115. As of Friday, the stock had recovered some, trading in the low $120s.

Boeing’s explanation about the lower guidance for 737 deliveries—12 fewer this year than in 2015—seemed, on the surface, reasonable. As the 737 MAX entered production, both with test aircraft and the first production airplanes, officials said this will lead to fewer deliveries of the NG.

But as stock analysts digested the information, skepticism arose. David Strauss of UBS issued a note last week in which he concluded the real reason for the lower deliveries is a likely production gap—not enough NG sales were achieved to bridge the gap from the NG to the MAX.

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Pontifications: Bad week for aerospace stocks

Feb. 1, 2016, © Leeham Co. Ouch.

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By Scott Hamilton

Boeing stock tanked about 10% last Wednesday when the company surprised analysts with unexpected news and below expectations 2016 guidance.

Bombardier became a penny stock.

What the heck happened?

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Pontifications: A sea change at Boeing

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By Scott Hamilton

Jan. 18, 2016, © Leeham Co. The surprise announcement last week of a tentative contract agreement between Boeing and its engineers union, SPEEA, was the best news coming out of the company that I’ve heard in years.

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Pontifications: Looking ahead to 2016

Jan. 4, 2016, © Leeham Co. Let’s take a walk through our outlook for 2016.

Boeing is 100

The Boeing Co. is 100 years old this year. July 15, to be precise. This is the last day of the industrial portion of the Farnborough Air Show.

There will no doubt be all kinds of celebrations at the Air Show. To the extent possible, I would imagine Boeing will try to have a whole lot of orders to announce there. There will be all kinds of run-up to the 100th anniversary. Few throw a party as well as Boeing. (Just don’t sing “Happy Birthday;” I never have liked this song.)

It’s a great achievement and we should all celebrate with Boeing for the next seven months.

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Pontifications: Assessing the benefit of new airplanes in low oil pricing

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By Scott Hamilton

Dec. 7, 2015, © Leeham Co.: Oil for West Texas Intermediate Crude closed Friday at $39.97. International Brent closed at $43.05. These figures continue to breathe life into used aircraft and raise questions about new orders.

In recent weeks, we’ve seen Delta Air Lines extend use of 15 Boeing 757s. Earlier United Airlines decided to refurbish 21 Boeing 767-300ERs. United is also leasing in 38 used Airbus A319s. Southwest Airlines is acquiring more than 20 used Boeing 737-700s through leases.

New aircraft orders are off for Boeing this year. Through Dec. 2, Boeing posted 568 net orders. Unless there is an explosive month in the remaining 24 days of this year, Boeing won’t meet a book-to-bill rate of one.

Airbus hadn’t posted its November orders as of Friday, but through October, the company recorded 850 net orders, comfortably more than a 1:1 book:bill. It announced 108 firm orders in November, with 14 of these representing a swap from A350-900s to A330-900s.

What is the affect of lower oil prices on the new airplanes?

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Pontifications: “I’m glad you’re not going far.”

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By Scott Hamilton

Nov. 23, 2015, (c) Leeham Co. An Airbus A321 is blown out of the sky over Egypt.

Two Air France jumbo jets are diverted due to bomb threats.

ISIS stages multiple, simultaneous attacks in Paris. Additional attacks are thwarted. Police raids in Belgium take place.

ISIS is declared a clear and present danger in Europe and the US.

The worries on a global basis are obvious. Being far more parochial, given the focus of LNC, what is the impact and potential impact on commercial aviation?

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Pontifications: Boeing to focus on “long-term liabilities” in 2016’s SPEEA contract negotiations

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By Scott Hamilton

Nov. 16, 2015, © Leeham Co. Boeing will target “long term liabilities” in its contract negotiations with SPEEA, the engineers union, its president quoted CEO Dennis Muilenburg as telling him in September.

Ryan Rule, president of the local SPEEA union, met for an hour with Muilenburg when he was here for a visit by China’s president Xi Jinping. Rule termed the meeting cordial. He told Leeham News last week that Muilenburg wasn’t specific about the “asks” Boeing will seek in contract negotiations next year, citing only “long term liabilities,” which Rule took to mean health care and pension benefits.

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