Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- RTX Q1 2025 Earnings: GTF Talk Takes A Back Seat To Tariffs April 22, 2025
- Tariffs Tumult Takes Over GE Aerospace Q1 2025 Earnings Call April 22, 2025
- Boeing reports mixed results of latest employee survey, but middle management and officers remain key obstacles April 22, 2025
- Hopes for 1Q financial progress turns into bumpy ride for Boeing April 21, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 18. April 18, 2025
The all-important cabin. Part 1
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By Bjorn Fehrm
May 23, 2024, © Leeham News: We will do an article series about the all-important cabin and its seating for an airliner. The cabin layout and its comfort are the most important parts of an airliner for the passenger.
Most of the time, the traveler doesn’t know what type of aircraft he is flying on, but he will have a clear understanding of the cabin and whether it meets his expectations.
The cabin is where the airline can expose its branding and set the flight experience for the passenger. It’s thus an area that is updated to new cabin concepts for the fleet more often today than 10 years ago, especially for mainline carriers.
The cabin is also important in evaluating airliners, as the characteristics of the aircraft (fuel consumption, operational costs) are evaluated per seat. OEMs have become experts in maximizing the seating of their aircraft to gain an advantage during an evaluation. Sometimes, in a non-transparent way. We will explain the typical tricks and how to guarantee an apples-to-apples comparison when evaluating airliners.
Summary:
- The cabin and its seats mean different things to a passenger, airline, and evaluation expert.
- We go through the different priorities, and how they affect the end product.
A350-1000 or 777-8? Part 2
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By Bjorn Fehrm
May 16, 2024, © Leeham News: We are doing an article series comparing the capabilities of the Airbus A350-1000 and the Boeing 777X. We have looked at the A350-1000 versus the 777-9 and started comparing the history and capabilities of the 777-8 versus the A350-1000 last week.
Now, we use our Aircraft Performance and Cost Model (APCM) to fly the aircraft on a typical route and compare their performance.
Summary:
- The A350-1000 and the latest 777-8 definition is a closer payload-range match than the A350-1000 and 777-9.
- Passenger and cargo capabilities are similar. The economic comparison will be determined by maintenance costs for the engines.
Airbus’ A350-1000 or Boeing’s 777-8? Part 1
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By Bjorn Fehrm
May 9, 2024, © Leeham News: We are doing an article series comparing the capabilities of the Airbus A350-1000 and the Boeing 777X series. We started with the 777-9, the larger model. Now, we continue with the shorter 777-8, an aircraft closer in size to the A350-1000.
The 777-8 was originally launched in a shorter version together with the 777-9. Then, it went very quiet around the 777-8, with some analysts speculating that the passenger version would not be done. The 777X freighter, the 777-8F, was launched in January 2022. It became a bit longer than the 777-8. This now forms the final definition of the 777-8.
Summary:
- The comparison of the A350-1000 and the 777-8 is comparing the longer-narrower versus the shorter-wider.
- Which is the best? We use Leeham’s Aircraft Performance and Cost Model (APCM) to find out.
A350-1000 or 777-9? Part 4
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By Bjorn Fehrm
May 2, 2024, © Leeham News: We are doing an article series comparing the capabilities of the Airbus A350-1000 and the Boeing 777-9. We looked at the development history of the aircraft and then their capability and fuel economics.
We could see that the 777-9 is trailing the A350-1000 in payload range, partly because we compare the base version of the 777-9 with a further developed A350-1000. Now, we investigate what the 777-9 performance would be should we include a typical future development of the Maximum TakeOff Weight (MTOW).
Summary:
- The A350-1000 has a clear payload-range advantage over the standard 777-9.
- With an in-service Maximum TakeOff Weight (MTOW) development like the A350-1000, the difference is reduced.
Boeing Financial Analysis – Inventory Q1 2024
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By the Leeham News team
April 29, 2024, © Leeham News: The Boeing Co (BA) released its financial results on April 24 for the first quarter of this year. BA relies heavily on Program Accounting to determine what amount of expenses are to be deducted against income, which is a major feature of the system.
The company also reveals the latest information about deferred program balances. This is closely related to Program Accounting.
A Quick Primer
Boeing describes program accounting in its financial statements:
Boeing Commercial Airplanes (BCA) develops, produces, and markets commercial jet aircraft principally to the commercial airline industry worldwide. Revenue on commercial aircraft contracts is recognized at the point in time when an aircraft is completed and accepted by the customer.
With respect to each of our commercial aircraft programs, inventoriable production costs (including overhead), program tooling and other nonrecurring costs, and routine warranty costs are accumulated and charged as cost of sales by program instead of by individual units or contracts.
Source: Boeing Financial Statements
As such, expenses reported for the sale of aircraft during the reporting period are not what was paid, but what BA estimates the average cost will be over the remaining orders and aircraft to be sold. Any overages are noted as an increase in Deferred Production Costs and are held in Inventory.
A350-1000 or 777-9? Part 3
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By Bjorn Fehrm
April 25, 2024, © Leeham News: We are doing an article series comparing the capabilities of the Airbus A350-1000 and the Boeing 777-9. We looked at the development history of the aircraft and compared their size and payload capacity.
Now, we use our Aircraft Performance and Cost Model (APCM) to fly the aircraft on a typical route and compare their performance. We also look at their stage of development and the potential for future upgrades inherent in the design.
Summary:
- The A350-1000 has got its Maximum TakeOff Weight (MTOW) increased four times since entry into service.
- The latest MTOW hike to 322t gives the A350 a clear payload-range advantage over the 777-9. Any increase in the 777-9’s MTOW will have to come after type certification.
Better transparency needed on Boeing’s 1Q earnings call
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By Scott Hamilton
Analysis
April 22, 2024, © Leeham News: Boeing reports its first quarter financing results on Wednesday. It’s not going to be pretty.
But how “transparent” will CEO David Calhoun and CFO Brian West be?
These days, “transparency” seems to be Boeing’s buzzword. It used to be “safety is our number one priority.” As we’ve seen about safety since the 2018-2019 737 MAX crisis, “safety” seemed more rhetorical than the Number One priority. “Safety” came under question again following the Jan. 5 accident involving Alaska Airlines Flight 1282. That’s the flight in which an emergency exit door plug blew off the airplane at 16,000 ft. Luckily, nobody was sucked out of the airplane. There were minor injuries and damage throughout the cabin. The plane was a 10-week-old 737 MAX 9. A new crisis was underway.
The National Transportation Safety Board (NTSB) quickly determined that four bolts that hold the door plug on 12 brackets were missing after what Calhoun euphemistically called a “quality escape” weren’t reinstalled during the final assembly of the accident airplane.
Subsequent information, including a special six-week audit by the Federal Aviation Administration (FAA) and a year-long study that was released within a month of the Alaska accident concluded Boeing failed to meet dozens of safety standards. Even safety procedures announced by Boeing after the first MAX crisis were not being met.
Calhoun and others within Boeing vowed transparency. However, the expert panel that conducted the year-long study noted their work was inhibited by non-disclosure agreements limiting access to documents. They also noted that some Boeing employees met with company lawyers before being interviewed.
Transparency over latest charges
Boeing last week made two engineers available in a special media conference to refute charges by a whistleblower that safety failures continue to occur in the final assembly of the 777 and 787. The technical presentation was detailed and thorough. Assuming the information was not cherry-picked, Boeing painted a picture that the complaints were either unfounded or that Boeing had corrected many of the issues already. The in-service 777 and 787 fleets are safe, they said.
LNA’s Bjorn Fehrm, an aerospace engineer who remains active in this capacity in our consulting business, reviewed the Boeing presentation and our raw transcripts. He backs the safety of the airplanes.
There has been a “growing trend of quality erosion,” wrote aerospace analyst Ron Epstein in an April 11 note, citing the 787 industrial debacle and its three-month grounding by the FAA in 2013. “A lack of oversight has plagued the MAX program since inception.”
But transparency issues don’t stop there. And here’s something for Calhoun and West to address on Wednesday (not that they will take our urging to heart).
Advertised production rates on the 737 and 787 lines are far higher than the data suggests. But Boeing has failed to be forthcoming about the true rates—and it hasn’t for months. Cash flow data may be affected by a recurring practice that some call an accounting trick to distort this picture.
Focus on quality not slowing innovation, says GKN
By Tom Batchelor
April 18, 2024, © Leeham News: The crisis at Boeing forced the entire supply chain to re-evaluate manufacturing processes and double down on quality control – but that is not yet stifling innovation, according to Peter Dilnot, CEO of Melrose PLC, the parent company of aerostructures and engine components supplier GKN Aerospace.
GKN Aerospace has undergone a restructuring that is now largely complete. Source: GKN
Melrose is most of the way through a comprehensive restructuring, and the company has emerged as a pure-play aerospace business that has consolidated production sites and exited “non-favorable” contracts.
“We don’t want to be everywhere,” explained Dilnot during a briefing in London attended by LNA this week, which was intended to set the scene ahead of July’s Farnborough Airshow.
“One of the reasons I think aerospace is so much in vogue at the moment is that it is one of the very few markets where you’ve got structural growth. Aerospace is unique in that we’ve got these long order backlogs, structural growth and as a result a growing top line for industry participants.”
From 50 production facilities pre-COVID, GKN is now down to 33, and it will soon be at 31 sites. Its four global technology centers remain in the UK, where it is headquartered, the US, the Netherlands, and Sweden.
The positioning of Melrose as a leaner business after the spin-off of its automotive unit is producing positive results. The company posted revenue of £3.35bn ($4.29bn) for 2023, 17% growth over the previous year, and adjusted operating profit of £420m (up from £186m in 2022), in its full-year results last month. Operating margin reached 12.5%, up from 6.3%, and profits of £700m are being targeted by 2025.
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Dissecting Boeing CEO’s statement next new airplane will cost $50bn
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By the Leeham News Team
April 15, 2024, © Leeham News: It was a stunning number.
Boeing CEO David Calhoun said his successor will have to decide on whether, or how, Boeing will proceed with its next new airplane. The price tag, he said, will be $50bn.
The Bombardier C Series was the last all-new, widely used single-aisle jetliner design completed and in service today as the Airbus A200. China’s C919 has only a handful of aircraft in service and Russia’s MC-21’s EIS is uncertain. Credit: AP Canada.
No airplane program at Boeing, except for the 787, ever came close to this cost. No program at Airbus did, either—and certainly none came close at Bombardier or Embraer.
The 787’s cost was a financial and industrial nightmare. Design, production, and industrial snafus combined to create delivery delays of 3 ½ years. Deferred production and tooling costs reached a peak of about $32bn. Customer compensation and other factors are believed to have boosted the total cost to around $50bn, a figure Boeing never confirmed.
On March 25, Boeing announced Calhoun will retire no later than Dec. 31. Chairman Larry Kellner won’t stand for reelection to the Board of Directors at the annual meeting (date TBA). Stan Deal, the CEO of Boeing Commercial Airplanes (BCA), retired immediately. He was replaced by Stephanie Pope, the former CEO of Boeing Global Services and current EVP and COO of The Boeing Co. Pope’s new role at BCA is in addition to her corporate position.
Shortly after the Monday Morning Massacre, Calhoun appeared on the financial network CNBC and, among other things, made his stunning price tag prediction. It’s a figure he referenced in passing before—but this time it caught the attention of broader media.
Single-aisle airplane programs historically cost between $10bn and $12bn. Widebody programs cost between $15bn and $20bn, excluding cost overruns. Bombardier’s C-Series, the most recent all-new, widely used single-aisle airplane, cost an estimated $6bn before Airbus took over.
Boeing hasn’t done an all-new new single-aisle airplane since 1982’s 757. Airbus hasn’t done an all-new single-aisle airplane since 1984’s A320.
LNA explains Calhoun’s number below.
A350-1000 or 777-9? Part 2
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By Bjorn Fehrm
April 10, 2024, © Leeham News: We are doing an article series comparing the capabilities of the Airbus A350-1000 and the Boeing 777-9. The A350-1000 has not been a hot seller, and a lot of analysts asked why. Is there a capability gap or what is the reason?
At the same time, the reworked Boeing 777X had reassuring initial sales at the November 2013 launch at the Dubai Air Show, where Emirates ordered 150 777-9 out of a total show orderbook of 259 aircraft for Emirates (150), Qatar (50), Lufthansa (34), and Ethiad (20). The orders have since grown to 481 as of late 2023.
The A350-1000 has had a recent resurgence in orders and switches from the A350-900 orders, whereas the 777–9 has seen several delays due to engine and certification problems and is now scheduled for 2025 delivery instead of 2020.
Does the 777-9 or the A350-1000 hold the upper hand in a long-term race between the largest widebodies after the Airbus A380 and Boeing 747-8i stopped deliveries? We use our Aircraft Performance and Cost model to compare the two to understand their present performance and potential for upgrades.
Summary:
- The Boeing 777-9 is a larger and heavier aircraft with a 12% higher passenger capacity.
- Does an advanced wing and later generation engines compensate for an older and heavier fuselage structure?