Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Airbus stopped consuming cash in 3Q2020 October 29, 2020
- Enhancing the Dreamliner, Part 4: the 787-9 analyzed. October 29, 2020
- Update 2: (adds earnings call information): Update 1: (adds Calhoun on CNBC): Boeing cites grounding, COVID, 787 quality issues in 3Q/9 month loss October 28, 2020
- Key Airbus, Boeing supplier sees recovery in 2022 October 28, 2020
- HOTR: With MAX nearing recertification, Boeing has bigger problem October 27, 2020
Enhancing the Dreamliner, Part 4: the 787-9 analyzed.
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By Bjorn Fehrm
Introduction
October 29, 2020, © Leeham News: We look deeper at the 787-9, the most successful member of the Dreamliner family. It’s 50 seats larger than the 787-8 but shares the same wing dimensions and engines.
The 787-9 quickly overtook the smaller 787-8 in sales and deliveries once its performance was clear to the airlines.
By following on the 787-8 it could benefit from many enhancements in design and production, becoming a very efficient aircraft in the process. To check its efficiency we run the 787-9 against its predecessor, the Boeing 777-200ER, on the San Francisco to Sydney route and look at the data.
Summary
- The 787-9 enjoyed all the improvements that came to light when developing the 787-8. The result is one of the most efficient twin-aisle aircraft on the market.
- Why it’s popular with the airlines becomes evident when we compare with the aircraft it replaces, the 777-200ER.
Public data doesn’t support Airbus A320 production rate hike
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Introduction
By Scott Hamilton
Oct. 26, 2020, © Leeham News: Airbus’ 3Q2020 earnings call is Wednesday. News emerged last week the OEM is notifying supplies that they should be prepared to increase production of the A320 from 40/mo to 47/mo in the second half of next year.
It is worthwhile looking at the delivery skyline as it currently exists.
Summary
- Forecasted delivery stream doesn’t support rat 47/mo until 2024.
- Airbus appears to be banking on faster recovery from COVID—or
- Picking up market share from Boeing.
Enhancing the Dreamliner, Part 3: 787-9
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By Vincent Valery
Introduction
Oct. 22, 2020, © Leeham News: After analyzing the 787-8, we now turn our attention to the following Dreamliner variant that entered into service, the -9.
Summary
- Lessons learned from 787-8 mishaps;
- A resounding commercial success;
- Some in-service drawbacks;
- Competition limits pricing power;
- An ultra-long-haul route.
Twin Aisle Deliveries: The Good, the Bad, and the Ugly
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By Vincent Valery
Introduction
Oct. 19, 2020, © Leeham News: LNA published last week an update on the latest 737 MAX production and delivery plans. This week, we turn our attention to the twin-aisle programs at Airbus and Boeing.
Both OEMs announced significant monthly production rate reductions earlier this year: the Dreamliner will go to six next year. The Airbus A350 is at five per month, while the A330 and Boeing 777 are at two. Airbus and Boeing will publish their third-quarter earnings later this month, which could include updated production rates.
LNA investigates the implications of the updated production and delivery plans for twin-aisle programs at Airbus and Boeing.
Summary
- Two programs in acceptable shape;
- Awaiting an elusive return to favor later this decade;
- A lack of healthy customers make the situation critical;
- Summing it all up with one metric.
Enhancing the Dreamliner, Part 2: The 787-8 analyzed
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By Bjorn Fehrm
Introduction
October 15, 2020, © Leeham News: We look deeper at the 787-8, the smallest member of the Dreamliner family. After selling well initially, it has fallen out of favor with the airlines.
We analyze why by comparing it with its more successful sister, the 787-9. The 787-8 and -9 were conceived together, with the -8 as the first birth to be quickly followed by a longer version, the 787-9.
With the troubles of the program, it took three years before the longer 787 was ready. By then it was in many ways a different aircraft than the 787-8.
Summary
- The 787-8, as the first aircraft in the 787 Dreamliner series had to crack the brunt of the program’s many problems.
- As a result, it ended up with first try solutions in many areas where the latter 787-9 could gain from the experience and use improved designs.
- We analyze what this means for the economy for the 787-8, both from an operational and manufacturing standpoint.
Resuming Boeing 737 MAX deliveries
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By Vincent Valery and Scott Hamilton
Introduction
Oct. 12, 2020, © Leeham News: The latest developments suggest that the FAA could lift the Boeing 737 MAX grounding by the end of November. The grounding lasted far longer than most industry insiders and Boeing expected.
Simultaneously, Boeing is working around the clock to get the ~460 737 MAXes produced since March 2019 ready for delivery to customers. The task became more complex as a result of the COVID-19 outbreak. Operators that previously couldn’t get 737 MAXes fast enough don’t need the extra capacity anytime soon.
Numerous airlines are in a precarious financial situation and won’t be willing or able to take new aircraft. Several lessors canceled near-term orders, while airlines are negotiating delivery delays.
With that in mind, LNA analyzes the most up-to-date delivery and production plans for the 737 MAX in future years.
Summary
- Deliveries stretched into the future;
- Ambitiously clearing inventory, then ramping-up production;
- One variant represents the bulk of deliveries; and
- Near-term deliveries by customer.
Enhancing the Dreamliner, Part 1: the 787-8
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By Vincent Valery
Introduction
Oct. 8, 2020, © Leeham News: The Dreamliner program is approaching its 1000th delivery less than 10 years after entry into service. It is the fastest-ever delivery ramp-up for any twin-aisle program.
However, the milestone will feel bittersweet due to the upcoming production rate cuts (to six per month from 14) and the decision to close the Everett final assembly line and concentrate final assembly to South Carolina.
As outlined several times before, air travel recovery in the aftermath of the COVID-19 outbreak will take years. Long-haul markets, which the 787 serves, should be last to return to normal.
The above means Boeing will deliver far fewer 787s over the next five years than it envisioned at the beginning of the year. Any significant upgrade of the aircraft is off the table for the foreseeable future. To boost sales and profitability, the American OEM is looking at how to improve its product line at minimal costs.
LNA published an article last month about Boeing’s study into lowering 787-8 production costs.
By the end of August 2020, Boeing had 48, 333, and 145 outstanding orders for the -8, -9, and -10, respectively. LNA estimated the total to be 38, 299, and 145, respectively, after adjusting for orders at risk.
We will, in our series, go through the different models in the product line, their history, and potential for further improvements now that the product line approaches midlife.
Summary
- Significant development problems and delays;
- A compromise(d) design leads to initial limitations;
- Deliveries slowed after post-EIS rush;
- The problem Boeing did not want to address;
- A long-haul route highlights potential enhancements.
Sunset of the Quads, Part 9, Wrap-up
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By Vincent Valery and Bjorn Fehrm
Introduction
Oct. 1st, 2020, © Leeham News: Last week, we compared the economics of the A380 against the 747-8 and 777-9 on the Frankfurt to New York route. We now wrap-up our series on the significant passenger quad-jets of the last 30 years and how competitive they were against other quads and the twins that gradually took over the very large aircraft segment.
Summary
- A resounding success, a respectable career, and three commercial failures;
- Prospects for a Quad-jet passenger operation in the post-COVID world are slim;
- The next quads will come as low emission technology drives implementations to smaller propulsive units.
With 787 FAL closing and 747 production ending, what does Boeing do with massive space in Everett?
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By Scott Hamilton and Bryan Corliss
Introduction
Oct. 1, 2020, © Leeham News: Boeing is expected to announce as early as today that it will consolidate the 787 final assembly lines into one at its Charleston (SC) plant.
Footprint of Boeing Everett final assembly building. This map is somewhat outdated but a current one is not available. Source: Seattle Times.
Reuters reported last week the decision to consolidate production in Charleston was made. The Wall Street Journal Tuesday night also reported this decision, saying the decision could be announced this week.
The Everett (WA) line is expected to close as production of the 787 falls below seven a month. Boeing previously announced the rate will fall from a peak of 14/mo to 6/mo by 2022.
With the closure of the 747 line in Everett slated for 2022, this will open huge bays in Everett. Nearly half the world’s largest building by volume will be empty. Given lower production rates because of the COVID-19 pandemic, the 777 lines will be woefully underutilized.
Overhead costs probably can’t be absorbed by the remaining low-rate production 767/KC-46A and 777 lines. Boeing warned in its 2Q2020 10Q SEC filing that the 787 and 777 lines face a forward loss depending on production rates of other lines.
With no New Midmarket Airplane (NMA) being contemplated to fill the empty bays, what can Boeing do to utilize these massive spaces and retain profitability of Everett?
A radical solution is moving the 737 line from Renton to Everett. This means Renton would close well before the 2033 date LNA predicts and selling off the property for commercial development.
Related stories
The engine manufacturers worst hit by the pandemic
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By Bjorn Fehrm
Introduction
September 28, 2020, © Leeham News: The worldwide COVID-19 pandemic is shaking the air travel and airliner manufacturing industries like no crisis before.
More than 9/11, the oil crisis of 1973 or 2005 or the financial crisis of 2008. The problems for the airlines and the airframe OEMs are on the front pages of the world’s media.
The part of the airliner industry that is not so visible but is perhaps hardest hit, is the engine industry. Its weird business model amplifies the effects of the crisis.
Summary
- Airframe OEMs lose money on the first hundreds of aircraft produced.
- When they announce “black numbers”, it means the per aircraft losses stop. It doesn’t mean the aircraft program is positive.
- For engine OEMs, it’s worse. They never reach ‘black numbers” on engine production. Their only money makers are old engine programs that fly a lot.