Leeham News and Analysis
There's more to real news than a news release.
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
The Small Airliner Problem, Part 10. Cash costs for a battery-based airliner
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By Bjorn Fehrm
July 6, 2023, © Leeham News: In our series on costs factors that make up Cash Operating Cost for a battery-based airliner with range extenders, we now add Crew costs and Airport/Airway fees.
We then have all the components of the Cash Operating Cost (COC) for the ES-30 and can compare it to a normal propulsion 30-seat turboprop.
Figure 1. The Heart Aerospace ES-30 hybrid 30-seat airliner. Source: Heart Aerospace.
Summary:
- The high operating weight and slow speed of a battery airliner increase the Airport/Airway fees and Crew costs for the ES-30.
- In summary, only one Cash cost remains competitive, and the COC total exceeds the cost of a 30-seater turboprop.
P2F conversion constrained by feedstock, certification issues
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By Judson Rollins
July 3, 2023, © Leeham News: As the supply chain chaos of the past two years finally winds down, the air cargo industry is trying to prepare for future growth.
IAI’s first 777 converted freighter, intended for Kalitta Air, has not flown since its initial testing flight on March 24. Source: IAI.
However, in an ironic twist, the industry’s near-to-intermediate term runway is constrained by some forces that propelled its supernormal profitability during the pandemic and recovery.
Thanks to growth in e-commerce, many industry observers revised their long-term growth forecasts upward. Cargo traffic growth estimates vary widely, from Cirium’s conservative 20-year expectation of 3.0% per year to Boeing’s optimistic call for 4.1% annually through 2042.
This year’s demand environment is less rosy as global trade falters, seaport backlogs have mostly cleared, shippers of high-value industrial goods suffer from microchip and other key commodity shortages, and recovering passenger airline service drives a glut of lower-deck “belly” capacity on most trade lanes.
The International Air Transport Association (IATA) recently said it expects air cargo demand to fall by 3.8% and revenues to contract by one-third for the full year. Cargo volumes were already down 5.3% year-over-year through April, said IATA.
Summary
- Express carriers are most exposed to short-term pain, but long-run prospects are brighter.
- Non-express carriers continue to be hard hit by excess capacity.
- Freighter conversion feedstock supply is tight.
- 777 P2F conversion slowed by possible certification issues; Boeing poised to sell more 777Fs?
The Small Airliner Problem, Part 9. Maintenance costs for battery airliners with range extenders
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By Bjorn Fehrm
June 29, 2023, © Leeham News: In our series on fundamental costs factors that make up Cash Operating Cost, COC (Fuel, Maintenance, Airway/Airport fees, Crew costs) for new Green airliners, we have analyzed the energy costs and now move on to the maintenance costs.
For a battery-based airliner with range extenders, it’s a complex mix of battery and gas turbine costs.
Figure 1. The Heart Aerospace ES-30 hybrid 30-seat airliner. Source: Heart Aerospace.
Summary:
- The maintenance costs for a battery-based airliner are high. It’s the batteries that cost, not the electric motors.
- Adding range extenders complicates the propulsion system and adds further costs.
Striking Machinists to vote Thursday on revised contract offer from Spirit
Striking Machinists Union members outside the Spirit AeroSystems plant in Wichita, KS./ Wichita Business Journal photo
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By Bryan Corliss
June 27, 2023, © Leeham News – Striking Machinists Union members at Spirit AeroSystems in Wichita will vote Thursday on a new contract offer from the company.
“The parties have reached a tentative agreement with the unanimous support of the entire Local 839 bargaining committee,” the union said Tuesday.
The tentative deal, which comes after three days of meetings between Spirit and union negotiators with a federal mediator, replaces the original offer rejected on June 21. Spirit shut down production at the Wichita plant the next day, and the union began picketing outside the factory on Saturday.
Spirit CEO Tom Gentile said his team “listened closely and worked hard in our talks over the last several days to further understand and address the priorities of our IAM-represented employees.”
Senior regional leaders of the International Association of Machinists are strongly recommending the deal.
“The contract is an industry-leading agreement that should make our members extremely proud,” IAM Southern Territory General Vice President Rickey Wallace and his chief of staff, Craig Martin, said in a statement released by the union.
A quick resolution to the walk-out would benefit Boeing. The Spirit plant in Wichita provides 70% of Boeing 737 aerostructures, along with nose sections for all other Boeing aircraft. It also provides components for the Airbus A220.
Thursday’s vote would require a simple majority for ratification. If it fails to get majority support, the strike would continue.
- Deal walks back unpopular health plan changes
- Bigger raises, reduced signing bonus
- Contract would end mandatory weekend overtime
- Union announced vote after meeting with stewards