Pontifications: New GE Aviation CEO will face big challenges

By Scott Hamilton

June 1, 2020, © Leeham News: The new chief executive officer for GE Aviation (GEA) will face huge challenges when he or she succeeds David Joyce when he retires this year, say industry sources. Joyce was named CEO in 2008.

Like other sectors of commercial aviation, the COVID-19 crisis hit GEA hard.

Initially, the workforce was cut by 10% in March. This was deepened to 25% in May. Non-essential spending was cut. A hiring freeze was implemented and other cost-cutting measures were put in place.

Summary
  • Demand for new airplanes tanked. The Boeing 737 MAX, powered by CFM LEAP engines, has been grounded since March 2019. No return to service is in sight. (GE is a 50% partner in CFM International, which makes the LEAP.)
  • LEAP engines on the 737 and the competing Airbus A320neo family fall way short of on-wing targets. Shop visits, under warranty, add to GE’s cost basis.
  • The Boeing 777-9, powered by the GE9X, is already a year late. A redesign of some critical parts of the engine was required.
  • COVID also decimates the engine aftermarket business, which is core to the OEM business model.

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Pontifications: Aircraft values, lease rates plummet

By Scott Hamilton

May 25, 2020, © Leeham News: Aircraft lease rates continue to plummet as the virus crisis infects the airline industry.

In an update of its periodic look at rates, the UK advisory firm ISHKA last week looked at 5-year old aircraft. Monthly Rates plunged as much at 26%. Aircraft values dropped as much as 15% (22% for an ATR-72).

Since Jan. 1, the Boeing 777-200F lost only 2% of its value but lease rates dropped 11%, despite high demand for cargo airplanes now. The Airbus A350-900 lost 5% of its value but lease rates were off 17%.

A five year old Boeing 787-8, on which pricing was under pressure before COVID decimated the airline industry beginning in March, now can be leased for $575,000/mo, ISHKA says.

The Airbus A320/321ceo and Boeing 737-800 also show sharp value and lease rate declines.

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Pontifications: There is no good news

May 18, 2020, © Leeham News: There simply is no good news in commercial aviation right now.

By Scott Hamilton

Yes, airport traffic is upticking in the USA (and elsewhere) slightly. But in the USA, it’s still less than 10% of last year’s totals.

There remains a tremendous amount of uncertainty.

  • Airbus plans to lay off some 10,000 employees, according to press reports. Another production rate cut seems inevitable.
  • Boeing’s CEO revised the forecast for air traffic recovery from 2-3 years to 3-5 years. Production recovery will take another 2-3 years after that, he said.
  • Embraer’s biggest customer for the E195-E2, Azul Airlines, deferred deliveries from 2020-2023 to 2024. There haven’t been announcements about deferrals by US carriers for E175-E1s, but there is no reason to believe these won’t be deferred.
  • Delta Air Lines says 7,000 of its 14,000 pilots will be surplus to its needs this fall.
  • Spirit Aerosystems laid off about 1,700 employees due to Boeing’s production planning.
  • Qatar Airways will retire 50 airplanes, defer new orders from Airbus and Boeing and cut the workforce by 20%.

The list goes on and on and on.

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Pontifications: Boeing focuses on design, production vs airplane development–for now

By Scott Hamilton

By Scott Hamilton

May 11, 2020, © Leeham News: Boeing killed development of its alphabet soup of airplane concepts for now.

“For now” is a relative term. When Boeing will be ready to show concepts to customers as a prelude to a program launch depends on how quickly the industry recovers from the COVID crisis.

But research and development of a streamlined production system, once key to new airplane projects, continues.

CEO David Calhoun said on the 1Q2020 earnings call that the New Midmarket Airplane (NMA) is essentially dead. He said in the following media call that the “differentiators” for the next new airplane from Boeing or Airbus will be manufacturing and engineering.

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Pontifications: What shape and how long will recovery take?

By Scott Hamilton

April 20, 2020, © Leeham News: There just is little good news for the aerospace industry right now.

Airbus announced it will reduce production by a third across the A-Series airliners. I don’t think this will be the last cut.

Boeing last week said it will resume production in the Seattle area of its wide-body airplanes. It’s also now preparing to restart production of the 737 MAX, clearly a piece of good news. Defense-related production for the P-8 Poseidon and the KC-46A tanker resumed last week.

But Boeing hasn’t laid out its production plans for the 7-Series airplanes. This undoubtedly will come next week. Monday is the shareholders’ annual meeting. This will be held virtually at 9am CDT. Access is via the Boeing website. The first quarterly earnings call will be held two days later, also accessible via the web. Either meeting may outline the production plans for the rest of the year.

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Pontifications: Airlines, OEMs step up in virus crisis

By Scott Hamilton

April 13, 2020, © Leeham News: There are plenty of stories and photos floating around the Internet about airlines flying empty or nearly so.

Schedules have been pared back up to 95% across the globe.

Spot-check Flightradar24 at any given moment and there are a lot air freighters flying.

But the passenger airlines are also flying some airliners dedicated to cargo. Some are flying cargo in the below-deck holds only. Others installed plastic protection over the passenger seats and loaded box after box after box of protective masks for shipment. Still others removed the passenger seats entirely and loaded the main deck with lighter-weight cargo.

This article summarizes many airlines that stepped up to fly supplies throughout the world.

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Pontifications: Critical step in Boeing MAX recertification target: May

By Scott Hamilton

March 30, 2020, © Leeham News: Barring further issues, the FAA Type Inspection Authorization for the MAX is targeted for the second half of May, LNA learned.

This is a critical step in recertifying the airplane.

Also barring more unexpected events in a year filled with them, Boeing should resume production of the 737 MAX in May, LNA confirmed.

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Pontifications: Getting around as airline service tanks

By Scott Hamilton

March 23, 2020, © Leeham News: There were times last week when the number of private airplanes in the air seemed to outnumber the airliners.

Periodic checks on FlightRadar24 of the skies around Seattle showed a dearth of commercial flights. By Friday, the US carriers already sharply pulled down operations. International flights were largely canceled.

Most cutbacks are likely.

With passenger traffic all but dried up—some flights had load factors of 20%-30% and others only one or two passengers—how might people get around while minimizing exposure to the coronavirus?

The private, general aviation airplanes are one choice.

Using corporate jets is another. But this option isn’t inexpensive, even when consolidating passengers.

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Pontifications: What kind of aid could US airlines get?

By Scott Hamilton

March 16, 2020, © Leeham News: Airlines in Europe already asked governments for financial aid as coronavirus forces massive schedule cutbacks and in some cases, complete service suspension.

In the US, talk of aid began in earnest last week.

Delta Air Lines, which is parking 300 airplanes and cutting 40% of its capacity, said it plans to seek US financial assistance.

There is increasing talk that the US may order a complete suspension of domestic air service. If so, this would be like 9/11, when for the first time in history the US shut down its skies.

Trans-Atlantic flights were diverted to Gander as 9/11 unfolded. Source: i.pinimg.com

That lasted only three days.

With federal officials saying the crisis hasn’t peaked in the US and it may be a couple of months before the crisis subsides.

US carriers will almost certainly seek government assistance.

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Pontifications: The nuts and bolts of air disasters

March 9, 2020, © Leeham News: Commercial aviation accidents are high profile news events.

By Scott Hamilton

These happen rarely. Many times, a lot of people are killed. (It should be noted that often survivors may outnumber those killed as safety improved.)

In this era of 24/7 cable news and minute-by minute social media, everyone wants instant answers as to causes.

Finding answers is not simple. A typical accident investigation usually takes 12-18 months before the investigators issue a final report with a probable cause.

One reason for this is that sometimes, the cause of an accident comes down to a single bolt, or even a single cotter pin.

This is where the new book, Flight Failure, Investigating the Nuts and Bolts of Air Disasters and Aviation Safety, serves to remind us of just how intricate accident investigation is.

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