Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Teamsters, Boeing have a new contract April 29, 2025
- Boeing wants to remarket China’s airplanes. It’s costly and time consuming. April 28, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 19. April 25, 2025
- How good is the C929? Part 2. April 24, 2025
- Boeing First Quarter Results Update: China is 10% of the backlog, with 500 in “Unidentified” April 24, 2025
Spirit Aero losses, cash burn continue
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By Scott Hamilton
Aug. 7, 2023, © Leeham News: Spirit AeroSystems reported another loss-making quarter last week as more special charges in Airbus and Boeing programs.
Spirit is a major supplier to Airbus and Boeing. Airbus receives A350 fuselage panels, some A320 wing components and the A220 wings from Spirit. Boeing receives entire 737 fuselages and the nose sections for the 767/KC-46A, 777 and 787 from Spirit.
Spirit accumulated more than $2.8bn in operating losses and more than $3.5bn in net losses since 2019, the last full year before the COVID pandemic began in March 2020. The global fleet of 737 MAXes was grounded in March 2019 following two fatal accidents five months apart. Production of the 737 was suspended in the fall of 2019. Deliveries resumed 21 months later.
Deliveries of the 787 were suspended in October 2020 after Boeing discovered tiny gaps in the fuselage joins on aircraft and other, unrelated issues. One of the gap problems—no bigger than the thickness of a piece of paper—was traced to Spirit.
Quality control problems with 737 fuselages were discovered last year and with the vertical fin this year. All Boeing events resulted in charges.
A supplier in the A220 wing program declared bankruptcy and ceased operations, resulting in a charge. Charges were also taken in the A350 program as production was cut during the pandemic.
Airbus and Boeing advanced hundreds of millions of dollars to Spirit to help keep the company afloat. Spirit refinanced $900m in debt last year at an interest rate of 9 3/8%, at the time an above-market rate that indicates the risk factor banks view Spirit.
The reality behind the eVTOL industry’s hyperbole, Part 4.
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By Bjorn Fehrm
August 3, 2023, © Leeham News: We look at the promises that the VTOL industry has made in their Investor prospects and the reality as they come closer to Certification and Production.
After looking at claims of range and utility, we now look at the operating economics. To do that, we need to predict the net sales price of these machines. We use our Aircraft Performance and Cost Model (APCM) to predict the production cost over time and, thus, the needed net sale price of the VTOLs.
Figure 1. The Archer Aviation Midnight VTOL mockup at the Paris Air show. Source: Leeham Co.
Summary:
- The VTOLs are big; the Archer Midnight is the size of a nine-seater commuter aircraft (Figure 1). Aircraft costs are related to size and weight.
- VTOLs use aeronautical production methods and supply chains for parts and systems. The production costs are, therefore, predictable.
Can airlines internally rapidly reduce CO2 and delays?
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By Michael Baiada
Special to Leeham News
Michael Baiada
July 31, 2023, © Leeham News: Sustainable Aviation Fuel (SAF), battery- or hydrogen-powered airplanes, eVTOLS and Advanced Air Mobility vehicles get all the headlines when it comes to reducing emissions in commercial aviation.
One area that doesn’t get much in the way of headlines is improvement in the “day of” airline operation. Improvements in ATC or ATM receives most of the attention. But a “single” sky in Europe and “free flight” or “NextGen” Air Traffic Management (ATM) in the USA on the Air Traffic Control (ATC) side remain hypotheticals, largely because of funding and political issues, not to mention that airline delays, congestion and excess CO2 are not an ATC problem.
On the airline side, Alaska Airlines experimented with a software planning program called Airspace Intelligence that saved 2.7 minutes per flight. This doesn’t sound like much, and in the scheme of things, it isn’t. But this amounted to the equivalent of 17m miles driven by cars during the experiment.
But just how well are efforts working around the world that are currently underway to increase airspace and airport efficiency and reduce airline delays, congestion, cancellations, and excess CO2?
For the last four decades airlines and ATC have literally spent hundreds of billions of dollars on new equipment, new aircraft and new technologies. Yet little has changed. Airline delays, congestion, cancellations and excess CO2 happen over and over again.
Of course, the obvious question is Why – Why can’t the US Federal Aviation Administration (FAA) and other authorities solve this problem?
The reality behind the eVTOL industry’s hyperbole, Part 3.
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By Bjorn Fehrm
July 27, 2023, © Leeham News: We look at the promises that the VTOL industry has made in their Investor prospects and what the reality is as they come closer to Certification and present their production-level prototypes. We also analyze whether these capabilities will be the final level.
Today we go through the trickiest part of any electric aircraft or eVTOL, the batteries. They are large, very heavy, and the most difficult part to certify on the aircraft, as the battery is dangerous if not designed, produced, and managed correctly.
Figure 1. The Joby Aviation S4 production prototype. Source: Joby Aviation.
Summary:
- The battery system of an eVTOL sets restrictions on the operational usefulness of the category.
- The everyday operational utility of VTOLs is far from the industries’ claims.
BDS: Another problem for Boeing
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By the Leeham News Team
July 24, 2023, © Leeham News: The Boeing Co’s 2Q2023 earnings call is Wednesday and the company continues to push uphill in its path for full financial recovery.
Last week, we examined Boeing’s challenges this Boeing Commercial Airplanes (BCA). This week we look at Boeing’s Defense unit, Boeing Defense, Space and Security (BDS). BDS is often overshadowed by BCA’s issues. But BDS has a recent track record of negative margins and negative cash flows.
Fixed priced contracts Boeing won proved to be underbid. BDS has taken a stream of big write-offs that don’t seem to have an end in sight.
This is an excerpt from the 2018 Boeing Company (BA) financial statements (edited for brevity):
The reality behind the eVTOL industry’s hyperbole, Part 2.
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By Bjorn Fehrm
July 20, 2023, © Leeham News: We look at the promises that VTOL OEMs made in their Investor prospects and the scale-down in capabilities as Certification comes closer. We also analyze whether the reduced capabilities will be the final cuts.
In the end, it’s about how operationally useful real-world eVTOL will be and what mission they do better or cheaper than helicopters. It will decide whether the category will have a breakthrough or not.
Figure 1. The Joby Aviation S4 production prototype. Source: Joby Aviation.
Summary:
- The Investor’s presentations from eVTOL OEMs are full of “up to” for speeds and feeds.
- When we use our aircraft and eVTOL performance model, the reality is well short of the claims.
Analysis: Boeing’s BCA problem
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By the Leeham News Team
July 17, 2023, © Leeham News: The Boeing Co. (BA) reports its second quarter earnings next week. The company continues to struggle with challenges, mostly but not entirely at Boeing Commercial Airplanes (BCA). BA has posted four consecutive years of financial losses, dating back to 2019.
Beset by issues indigenous to them, the pandemic exacerbated an already difficult situation. With a net debt load of over $40bn and annual interest payments hovering around the $2.5bn mark, it will be difficult for BA to regain financial health if their core business does not produce positive results.
LNA looks at the BCA division, how it is crucial to the long-term success of the company and the correlation it plays in regard to company profitability.
The reality behind the eVTOL industry’s hyperbole
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By Bjorn Fehrm
July 13, 2023, © Leeham News: We have done a deep dive series on the cost problems experienced by small airliners and how these make life difficult for alternative propulsion projects.
The eVTOL industry also faces problems, but here it’s more its own overinflated promises that rub. It’s the subject of our next deep dive.
We look at what the top OEMs promised in the past and what the reality is as they come closer to Certification.
When it comes down to it, what missions can be flown and what cannot? Are the missions that can be flown enabling a new industry?
Figure 1. The Joby production prototype as presented on 28th June. Source: Joby Aviation.
Summary:
- Investor prospects promised Total Available Markets (TAMs) as large as $500billion with flights at up to 200 miles per hour to destinations hundreds of miles away
- The reality is more profane. None of these promises hold water.
Analysis: Spirit strike likely a sign of changing aerospace labor market
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By Bryan Corliss
Striking Spirit AeroSystems workers blow whistles in front of one of the factory gates./Wichita Business Journal photo
July 10, 2023, © Leeham News – In case anyone had slept through all the earlier alarms going off, the whistles and airhorns that sounded during the mercifully short-lived Machinists Union strike at Spirit AeroSystems should have been a wake-up call:
This ain’t the 2010s aerospace labor market anymore.
In the labor market of 2023, hourly workers don’t want to come in on weekends. They want raises, and they’re not interested in getting paid in stock. And don’t you dare think of cutting off payments for the prescription drugs their kids need to take to stay healthy.
All this is going to create a challenge for the aerospace industry. For the past two decades, executives have focused on growing profit margins by holding down marginal costs – especially labor costs.
A decade ago, aerospace companies were able to win labor concessions by threatening to take work away.
Today, it’s the workers who seem to have leverage, and OEMs are going to have to figure out how to keep them happy and productive, or explain to the Kirbys, O’Learys and Al-Baker’s of the airline industry why their planes aren’t getting out of the factories on time.
- Tide of outsourcing seems to have turned
- Baby Bust: Fewer workers in the workforce
- St. Louis, Wichita: Red state Machinists vote to strike
- What’s next: SPEEA at Spirit, IAM at Boeing