Pontifications: Suppliers don’t lack for demand, but haven’t recovered from Pandemic crisis

By Scott Hamilton

Oct. 3, 2022, © Leeham News: Aerospace suppliers don’t lack demand. But they still have a long way to go to recover from the crisis brought about by the COVID-19 pandemic. The pandemic began in earnest in March 2020. While largely under control today, there are still COVID variants sending people to hospitals and deaths.

Jeff Knittel, the president of Airbus Americas, homed in on the fundamental question during the US Chamber of Commerce Aerospace Summit last month in Washington (DC). Knittel moderated a panel with suppliers Tom Gentile, CEO of Spirit Aerosystems, and Paolo Dal Cin, Senior Vice President, Operations, Supply Chain, Quality, Environmental, Health, and Safety for Raytheon Technologies.

“Is this the beginning or the end or the end of the beginning in terms of [supply chain] disruptions?” Knittel asked. “This has been painful for everyone, and outside our industry also. Where do you see us today in terms of the recovery and next steps for you and the industry?”

“I would say that the recovery has started for the supply chain, but we still have a long way to go,” said Gentile. At the July Farnborough Air Show, there were few orders announced. The whole story was the supply chain.

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Pontifications: Single-pilot jetliners OK for cargo, not yet for passenger airplanes

By Scott Hamilton

Sept. 26, 2022, © Leeham News: I sat down with Fred Smith, the founder and now executive chairman of FedEx, on Sept. 15 at the US Chamber of Commerce Aerospace Summit. The first article appears here.

The balance of the interview covered a wide range of topics. I’ll summarize them below.

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Pontifications: No engines, billions shy, devastating enviro analysis, Boom’s CEO still exudes optimism

By Scott Hamilton

Sept. 20, 2022, © Leeham News: Blake Scholl, the founder and CEO of Boom, the start-up company, continued to paint an optimistic picture about the Overture Supersonic Transport.

He told the US Chamber of Commerce Aerospace Summit last week that the Overture, a Mach 1.7 88-passenger aircraft concept, will revolutionize international air travel.

But Boom has big challenges ahead—not the least of which is that there is no engine manufacturer so far that has stepped up to provide an engine. The Big Three—GE Aviation, Pratt & Whitney, and Rolls-Royce—have either outright rejected participation or other priorities exist.

Plethora of Challenges
  1. Rolls says publicly it won’t pursue an engine for Boom. GE told LNA it’s not interested in developing an engine for Boom. P&W is focused on advances for its GTF, developing sustainable technology and military engines.
  2. The International Civil Aviation Organization (ICAO) in July issued a report on the environment that eviscerated SSTs and the SAF concept outlined for Boom. The report included analysis from the International Council on Clean Transportation (ICCT).
  3. Scholl claims a market demand for thousands of SSTs but Boom’s 2013 study by Boyd International forecast a market demand over the life of the program of 1,318 Overtures. Some thought this figure was generous.
  4. Boyd’s report also concludes Boom needs a Mach 2.2 airplane to be commercially viable. Scholl reduced the speed to 1.7. This means that in some cases, airline crews can’t do a round trip from the US to Europe without a relief crew, which upsets some of the economics.
  5. If Boom were a publicly traded company, all the orders would fall under the ASC 606 accounting rule that questions the viability of those orders.
  6. Scholl told AIN Online Boom needs $6bn to $8bn to come to market and so far, it has raised $600m.
  7. And we don’t get into the certification and regulatory hurdles. Among them: In his presentation to the Chamber, Scholl said there are 600 potential SST markets. He included some inland in the US, where there is a ban on SSTs flying over land.

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Pontifications: BOC Aviation sees widebody recovery next year

By Scott Hamilton

Sept. 12, 2022, © Leeham News: Widebody aircraft demand cratered during the COVID-19 pandemic. It’s still depressed.

But the chief executive officer of lessor BOC Aviation sees recovery in the works.

“We’re beginning to see quite a big pickup in demand for widebody aircraft,” Robert Martin told LNA in an interview late last month. “Not now but starting next year. What’s prompting that is people are beginning to realize that China will probably open in the fourth quarter this year for international traffic. Just to give you some statistics, if you go back to 2019, China outbound was more than 70 million passengers. Last year was 1.5 million, and so the amount of uplift is quite full.”

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Pontifications: Some customers face 3 month delays in current 737 MAX delivery stream

By Scott Hamilton

Sept. 5, 2022, © Leeham News: Boeing has been delivering 737s from its stored inventory and its new production line more slowly than desired. Some customers face a three-month delay, even as Boeing tries to return to normalcy following the 21-month grounding of the MAX and the impact of the two-year pandemic.

The supply chain is a key culprit. Reconfiguring stored airplanes for lessees or buys after a change from the original operator is another. Engine shortages are still another.

BOC Aviation, a lessor headquartered in Singapore, faces three months delays, Robert Martin, the CEO, said in an interview with LNA.

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Pontifications: Signs point to China OK soon for Boeing deliveries, orders

By Scott Hamilton

Aug. 29, 2022, © Leeham News: The Chinese government appears on a path toward authorizing Boeing to resume deliveries to airlines by or early in the fourth quarter, China watchers tell LNA.

China hasn’t placed new orders for Boeing aircraft, with few exceptions, since then-President Donald Trump initiated a trade war with China shortly after taking office in 2017.

Nor has China taken delivery of more than single-digit numbers since 2019, following the grounding of the 737 MAX in March that year. China’s regulator, CAAC, was the first to ground the domestic MAX fleet following the second accident of the type in March 2019, five months after the first accident.

China was the last major regulator to recertify the MAX, in December 2021, following the FAA’s recertification in November 2020. But CAAC has not authorized deliveries. It appeared on the cusp of doing so when last May a China Eastern Airlines 737-800 nose-dived from cruising altitude into the ground, killing all aboard. CAAC ordered China Eastern and its affiliated airlines to ground all 737-800s, a move widely believed to be unwarranted given the circumstances of the crash that tentatively pointed to a cockpit-controlled dive. Later investigation largely confirmed this, though no accident report has been released yet.

Because of the crash, CAAC withheld authorization for Boeing to resume deliveries of the MAX. Geopolitical considerations also are believed to have played a role as tensions between the Washington and Beijing continued over the unresolved trade war, China’s straddling sides in the Russian-Ukraine War, and visits by members of the US Congress visited Taiwan. China regards Taiwan as a renegade province and objects to political visits by other countries.

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Pontifications: Heros and a thriller–two book reviews

Fly Boy Heroes, The Story of the Medal of Honor Recipients of the Air War Against Japan

By James H. Hallas. Stackpole Books, $29.95.

The First Counterspy

By Kay Haas and Walter W. Pickut. Lyons Press, $29.95.

Aug. 22, 2022, © Leeham News: Two books from my summer reading aren’t about commercial aviation but will be interesting to the broader aviation community.

These are Fly Boy Heroes, The Story of the Medal of Honor Recipients of the Air War Against Japan, and The First Counterspy.

Fly Boy chronicles short stories about the US Medal of Recipients who flew against Japan in the Second World War. Author James Hallas begins with the Japanese air raid on Pearl Harbor and ends with an April 12, 1945, Boeing B-29 raid on Japan. In between, the Doolittle Raid on Tokyo in April 1942, the Battle of the Coral Sea, Midway (the outgrowth of the Doolittle Raid), and other combat missions are recounted. The Medal of Honor recipients of these battles are, as the book’s title suggests, the flyboys whose above-and-beyond exploits earned them the Medal. Not all survived their missions, but some did. For those who did, not all had happily ever after endings late in the war or in civilian life.

Being a Chicago area native, I knew that O’Hare International Airport was named after Lt. Commander Edward O’Hare, more commonly known as “Butch.” I also knew, though few others today might, that Butch was the son of Chicago mobster Edgar J. O’Hare, or E. J. E.J. was a lawyer for Al Capone and testified at Capone’s tax evasion trial that sent the mobster to Alcatraz. For his troubles, E.J. was murdered in 1939.

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Pontifications: A bad feeling for the JetBlue-Spirit merger

By Scott Hamilton

Aug. 8, 2022, © Leeham News: I don’t normally report on airline mergers except as these may relate to aircraft fleet planning and the impacts on Airbus, Boeing, and Embraer.

However, the JetBlue-Spirit Airlines merger is an exception.

Much has already been written about the questions arising about whether the US Department of Justice will approve the merger; the incompatibility of the two business models; the cost to reconfigure Spirit’s airplanes to the JetBlue cabin standards; and, to some degree, the disparity in labor costs.

It’s the latter I will focus on today.

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Pontifications: Two books examine GE’s fall from grace

Lights Out: Pride, Delusion, and the Fall of General Electric

By Thomas Gryta and Ted Mann

Mariner Books, $17.99, 361 Pages

The Man Who Broke Capitalism, How Jack Welch Gutted the Heartland and Crush the Sole of Corporate America—and How to Undo His Legacy

By David Gelles

Simon & Schuster, $28.00, 264 Pages

Aug. 1, 2022, © Leeham News: Two recent books about GE and its most prominent CEO, Jack Welch, offer different focus and fascinating insight.

By Scott Hamilton

One, Lights Out, is a detailed chronicle of the Welch era and those who followed. This book goes into much more detail than Gelles’, which is more of a biography of Welch than a corporate history—although obviously, there is pollination of both.

Gelles, a reporter for the New York Times, goes into some discussion about Boeing and the Welch-influenced people who came to lead Boeing, notably Jim McNerney and David Calhoun. But don’t expect Gelles’ book to take a deep dive into how Welch’s tutelage of McNerney and Calhoun affected Boeing. The discussion is superficial. This is, after all, a book focused on Welch.

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Pontifications: Boeing gets boost from Farnborough; now, it must deliver

July 25, 2022, © Leeham News: Boeing announced last week during the Farnborough Air Show orders and commitments for 278 737 MAXes, nine 787s, and two 777-8Fs.

By Scott Hamilton

Now, Boeing must deliver. Some of the 737 delivery positions in earlier orders were promised to begin in 2023. Some in the Farnborough orders are promised from 2025. These early delivery positions are one of the reasons (but not the only, to be sure) that Boeing has won some 1,000 MAX orders since the plane was recertified in November 2020.

But Boeing struggles to bump its MAX production rate. Officials hoped to hit a rate of 31/mo early this year. Boeing hasn’t confirmed a report that it hit rate 31 only this month. Confirmation may come during the Boeing 2Q2022 earnings call on Wednesday. Delays from the supply chain hurt Boeing’s ability to ramp up. With a projected production ramp up to 52/mo by 2025 (the pre-grounding level in March 2019), the question is whether the supply chain will be able to meet Boeing’s schedule.

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