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: The crystal ball
By Scott Hamilton
May 30, 2016, © Leeham Co.: We at Leeham Co. and Leeham News and Comment take some risk when we make analyses, forecasts, projections and predictions. These often put us out on a limb, open us to criticism and even ridicule and as often as not really pisses off those companies that are the target of such predictions.
Some recent events and news stories caught my eye that validated something I predicted eleven years ago.
First, the set up.
Pontifications: ICAO continues to drag feet on real-time data transmission
By Scott Hamilton
May 23, 2016, © Leeham Co.: Malaysia Airlines MH370. Air Asia 8501. Egyptair 804.
Three passenger flights lost over the oceans. One, MH370, remains undiscovered to this day. Air Asia took a couple of weeks to locate. Egyptair debris took about 36 hours. The black boxes are still missing from MH370. Once the Air Asia wreckage was discovered, the boxes were recovered fairly quickly. According to media reports, the black boxes of 804 have been “generally” located, but Egypt has dispatched a submarine to more precisely locate them.
The absence of real-time data transmission from the Flight Data Recorders contributed to the mysteries of what happened to these aircraft and spurred wild theories and conspiracies. ACARS, which does transmit data from airborne aircraft, does so at intervals–not real-time. Real-time data streaming from on board transmissions could provide immediate answers to what happened to an airliner.
Pontifications: Improbably, 787 surplus develops
By Scott Hamilton
May 16, 2016, © Leeham Co.: As improbable as it sounds, a short-term surplus of Boeing 787s has developed, say several market officials. Lease rates in some cases on 787-8s and 787-9s have dropped below $900,000/mo for 787-8s and somewhat above this figure for 787-9s as lessors compete with Boeing to place airplanes.
Analysts covering leasing companies, both publicly traded and privately owned, have also heard about falling lease rates for 787s.
“However, this all hinges on the cost and learning curve assumptions, which are difficult to get confident with considering we hear 787 lease rates are under pressure, and there are slots opening up, which can impact timing of future deliveries,” Canaccord wrote in a research note last week after the Boeing Investors Day in which officials outlined the plans to recover $29bn in deferred production costs. Other analysts also report hearing of lease pricing pressure on the 787s.
- Slow sales for the Boeing 787, reports Reuters.
Pontifications: Derivatives at Boeing
By Scott Hamilton
May 9, 2016, © Leeham Co.: Last week proved to be significant when the CEO of The Boeing Co. and the head of the 737 MAX program each said the company is looking at revising its smallest member of the family, the MAX 7, and potentially enlarging the biggest member, the MAX 9.
Neither prospect was news. Jon Ostrower of The Wall Street Journal revealed the prospect of what he called the MAX 7.5, a slightly larger airplane than the current MAX 7. The idea of an airplane larger than the MAX 9, based on the MAX 9, was floated when Jim McNerney was still CEO.
What was news is that for the first time, the Boeing CEO and the head of the MAX program went on record essentially admitting the MAX line isn’t well positioned against Airbus after all. Or, on the lower end, to Bombardier.
Pontifications: Big sigh of relief at Bombardier
By Scott Hamilton
May 2, 2016, © Leeham Co.: To say that the order from Delta Air Lines last Thursday for 75+50 CS100s with conversion rights to the CS300s was welcome news for Bombardier is an understatement.
Bombardier has a superb airplane in the C Series. The passenger seats are the most comfortable coach seats of any manufacturers, better than the Airbus A320 and way more comfortable than the Boeing 737. With apologies to Embraer, the C Series is even marginally better than the Embraer E-Jet, which is very good. Read more
Pontifications: Earnings week for Airbus, Boeing, Bombardier and Embraer
By Scott Hamilton
April 25, 2016, © Leeham Co.: Airbus, Boeing, Bombardier and Embraer having their first quarter earnings call this week. Bombardier also has its Annual General Meeting concurrent with its 1Q earnings on Friday.
The big anticipation will be with Bombardier.
Earlier this month, The Wall Street Journal reported Delta Air Lines was going to order 75+50 C Series from BBD. Delta, on its 1Q earnings call, said it had nothing to announce but would have more to say at its investors day. This is May 16.
But at the same time, BBD postponed its AGM and 1Q call from the 28th to the 29th. Delta’s board of directors meets on the 28th. Previously, BBD postponed by one day its year-end earnings call to coincide with Air Canada, which announced an order for 45 C Series, plus options.
Is Bombardier’s rescheduling another harbinger of the Delta order, or will Delta hold off any announcement until that May 16 investors day?
Or could Delta announce the Bombardier order Friday and the widely reported, expected order for 30-37 Airbus A321ceos?
The world aviation geeks wonder.
Pontifications: Airbus, Boeing, Bombardier and export credit support
By Scott Hamilton
April 18, 2016, © Leeham Co.: Export Credit for airliners was back in the news last week, with the US taking aim at the prospect of Canada’s agency supporting sales of the Bombardier C Series to the US and France and Germany suspending export credit support for Airbus airplanes.
The week before, Dennis Muilenburg, the CEO of The Boeing Co., testified before Congress that although the US ExIm Bank was reauthorized, Senate action—or more accurately, inaction—on confirming members of the ExIm Board of Directors has kept the agency shut down for new deals. There isn’t a quorum of members on the Board to approve new deals.
Pontifications: Catching up on the KC-46A, KC-30A
By Scott Hamilton
April 11, 2016, © Leeham Co.: The Government Accountability Office (GAO) concludes that the Boeing KC-46A aerial refueling tanker for the US Air Force has “challenging testing and delivery schedules” ahead in its annual review of the program.
It’s been a long, long time since I wrote about aerial refueling tankers. Having delved into this topic during the long-running saga of the USAF recapitalization effort, and the competitions between Northrop Grumman/EADS and later Airbus alone and Boeing, the topic had been beaten to death.
But as we who follow such things know, Boeing’s current effort to build the winning KC-46A for the Air Force has run into more than a few problems. These have led Boeing to be at least eight months late and write off $1.2bn pre-tax on the program.
And the problems aren’t over.
Pontifications: Boeing’s 8,000 employee reduction isn’t nearly enough
By Scott Hamilton
April 4, 2016, © Leeham Co.: Boeing’s plans to reduce head count at Boeing Commercial Airplanes by 8,000 jobs this year dominated the news last week. Comparing employment figures with Airbus Commercial shows this reduction isn’t nearly enough.
BCA has 22% more employees per airplane than Airbus. BCA is a bloated organization. Some of this undoubtedly is inherent to being a 100 year old company, compared with Airbus being less than 50. Airbus is more automated than Boeing as well.
Pontifications: Airbus USA321 a milestone for US aerospace
By Scott Hamilton
March 28, 2016, © Leeham Co.: The first US-built A320ceo family member took to the skies for its first flight last week. The A321ceo, destined for JetBlue, is the first assembled at the new Airbus A320 plant in Mobile (AL).
This is a milestone for Airbus, obviously. The Mobile plant was first proposed as the assembly site for the KC-330 MRTT (Multi-Role Tanker Transport) proposed for the US Air Force to replace the aging Boeing KC-135s. Northrop Grumman, which paired with Airbus parent EADS (as it was then known) to offer the KC-330, won the contract. The celebration was short-lived. The Government Accountability Office overturned the award. Northrop bowed out of the next round of competition, which Boeing won.
Airbus subsequently decided to create an A320 assembly site at the same Mobile location planned for the KC-330. (I visited the site for grand opening last September.)
This is the fourth A320 assembly site, after Toulouse, Hamburg and Tianjin. Airbus hopes the Mobile site will help spur sales in the US, where it still trails Boeing in market share.
Milestone for US Aerospace
While this plant is a milestone for Airbus, it’s a milestone on a much more macro level, too. This is the first commercial airplane assembly site by a second airplane manufacturer since Boeing closed the McDonnell Douglas MD-11 and MD-95 (aka Boeing 717) assembly lines in Long Beach (CA) in 2000 and 2006, respectively. The last legacy MDC assembly site, for the military C-17, closed early this year.