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.
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.
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.
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.
March 21, 2016, © Leeham Co: My Pontifications for the last two weeks examined how the Airbus and Boeing messaging continues to do battle for the product line ups. Boeing continues to denigrate the Airbus widebody line and Airbus fighting back, using Boeing’s own tactics alleging a product gap.
Boeing claims then A330neo is “dead on arrival” and the Airbus widebody strategy is “a mess.” Neither claim holds up under scrutiny. Certainly there is some weakness in the Airbus line: the A330-200 sales slowed to a trickle and the A330neo, especially the -800, has yet to truly advance. The A380 struggles and the A350-1000 is slow—but after the initial, unique splurge of the 777X, sales of this airplane have been anemic, too.
Airbus points out the sales of the 787-8 have dried up. So have sales of the 777-300ER, in sharp contrast to the unexpectedly strong sales for the A330ceo—enough so that Airbus is taking the production rate back up, to 7/mo, from the previously announced reduction to 6/mo.
Here’s why the 787-8 has become a dying sub-type.
Special Edition of Pontifications
Advancing EIS of the 777X
I’m somewhat bemused by all the fuss over the prospect of Boeing advancing the delivery of the 777X from early 2020 to late 2019. This has been the plan for more than a year. That’s what my sources have been telling me all this time.
It’s been the desire longer that that.
March 14, 2016, © Leeham Co.: Airbus is presenting a new edginess in the long-running war of words with Boeing, adopting a tactic Boeing has used for years to make its case.
The European manufacturer has never been shy about getting in its digs at Boeing, but generally Boeing’s messaging—years in the making and steadfastly adhered to—has had more sticking power than Airbus’.
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.
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:
Feb. 15, 2016, © Leeham Co. In the news business, it’s called the gift that keeps on giving.
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.)