Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- 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
- Boeing First Quarter Results: Tariffs, Return flights, $10.55bn asset sale April 23, 2025
How much can China’s traffic growth slow? A look at Japan
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By Vincent Valery
Introduction
Dec. 12, 2022, © Leeham News: The Chinese commercial aviation market is now the second largest in the world after the United States. Growth has been very robust in recent decades, and all major OEMs forecast things to stay this way in the next two decades.
Credit: Japan Rail Pass
However, the Chinese economy’s GDP (Gross Domestic Product) growth rate slowed down significantly throughout the 2010 decade: from around 10% to 6% in 2019. Separately, China’s working-age population peaked during the same decade.
The growth in passenger traffic has historically had a strong correlation with GDP growth. Several studies have shown that passenger traffic has grown 1.5x to 2x faster than GDP. The consequences of a potential passenger traffic growth slowdown in China are, therefore, significant for commercial aircraft OEMs.
Another country in the Asia Pacific region faced a similar situation in the early 1990s: Japan. Even though there are substantial differences between the two countries, analyzing how things played out in Japan could help understand what lies ahead for Chinese passenger traffic growth.
Summary
- Demographic and economic parallels;
- Competition from high-speed rail;
- As Japan’s GDP grew, so did air and train travel;
- Explaining the 2010s Japan air traffic boom;
- Significant differences between China and Japan.
Bjorn’s Corner: Sustainable Air Transport. Part 49P. eVTOL production costs. The deeper discussion.
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By Bjorn Fehrm
December 9, 2022, ©. Leeham News: This is a complementary article to Part 49, eVTOL production costs. It discusses the typical production costs of a certified eVTOL when produced in large quantities.
eVTOLs will be produced under aeronautical production certification conditions, using aeronautical grade material and system. Our production cost model predicts such costs, including learning curve effects for each material type.
The Economics of the 767 and A330 at Seven and Eight abreast
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By Bjorn Fehrm
Introduction
Dec. 8, 2022, © Leeham News: In a previous article, we started speculating what an NMA type of aircraft would look like based on a Boeing 767 cross-section. An airliner’s cross-section decides the design of a large number of parts in an airplane.
In essence, a fuselage is a tube with a constant cross-section where the constant parts are repeated framewise to form the fuselage. It’s finished with a tapering forward cockpit and a rear tapering empennage.
We now look at what could have been a passenger version of an NMA that would have used the Boeing 767 cross-section with adaptations. To understand its economic impact, we make a comparison where we take a standard 767-300ER, then modify it to an NMA type fuselage and compare it to the competition in the size class, the A330-200 and -800.
As before, we do this by flying the world’s busiest long-haul route, London Heathrow, to New York JFK.
Summary
- An NMA based on an improved 767 fuselage cross-section would have been a very competitive airliner
- I would be the ideal replacement for the Boeing 757, 767, and 787-8.
Pontifications: A lost decade for new airplanes
By Scott Hamilton
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Dec. 5, 2022, © Leeham News: In September 2020, LNA wrote that commercial aviation was facing a “lost decade.”
The impetus for this prediction was the COVID-19 pandemic crisis.
“Commercial aviation is facing a lost decade due to COVID,” we wrote. “Yes, most forecasts target 2024-2025 as returning to 2019 passenger traffic and aircraft production levels. However, LNA in July published its own analysis indicating full recovery may not occur until 2028.”
Nobody predicted that effective vaccines would emerge as quickly as they did. Drug makers in the US and Europe moved heaven and earth to produce vaccines to fight COVID-19. These have been, by and large, extremely effective. (I’ve had two shots and three boosters and have not caught COVID, despite being at one major conference with 13,000 people.)
China created its own vaccine, which failed to stem the tide there. President Xi quickly adopted total lockdowns at the first sign of outbreaks. Despite this, China is now setting records for new infections. Commercial aviation recovery there remains underperforming. China’s performance illustrates the underlying reasoning we had in concluding commercial aviation was facing a lost decade.
This sector still faces a lost decade, though for some fundamentally different reasons.
Green aviation pressure applied to banks, oil companies, too
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By Scott Hamilton
Dec. 1, 2022, © Leeham News: Pressure from environmentalists is prompting the aviation industry to move toward sustainable fuels.
But the pressure is not just on aviation. It’s also on bankers who finance airplanes and aerospace companies. These firms must show their shareholders, stakeholders and special interest groups that they are taking sustainability into account as they finance their customers.
The pressure is on oil companies, though many believe Big Oil isn’t really interested in cutting back its core business in favor of alternative energy.
In an interview with LNA, Chris Raymond, the chief sustainability officer for The Boeing Co., is frank about the challenges of meeting commercial aviation’s goal of achieving net zero carbon emissions by 2050. But he’s optimistic that the industry is on the right path.
It’s a path that’s been promoted before, with little success. In the first decade of the 21st century, the industry talked big but little activity occurred. In 2011, Jim Albaugh, then the CEO of Boeing Commercial Airplanes, predicted that 10% of fuel by 2020 would be Sustainable Aviation Fuel (SAF). The reality was that SAF accounted for 0.001% of the fuel.
Credit: Boeing.
Today, there are demonstration flights, including passenger-carrying flights, that used 50% SAF.
Boeing faces exodus of senior engineers in tight market for talent
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By Bryan Corliss
Nov. 28, 2022, © Leeham News: Boeing’s engineering corps could become further depleted within the next few days, as union-represented engineers and technical workers at the company’s Puget Sound plants face a Wednesday deadline on filing their retirement paperwork.
If they don’t leave now, individuals could face retirement benefit losses in the hundreds of thousands of dollars.
The potential loss of several hundred of Boeing’s most experienced engineers comes at a time when the company is scraping together engineering teams to tackle production problems in Charleston, and in the midst of an industry-wide shortage of engineering talent.
Summary
- Aggressive hiring sparks Brazilian lawsuit
- Engineers face Wednesday deadline
- All aerospace companies need engineers
- Tech industry layoffs won’t help
Read more
The Boeing 767 Cross Section, Part 1
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By Vincent Valery
Introduction
Nov. 24, 2022, © Leeham News: Last week, we saw the impact of using a nine-abreast economy class seating configuration on the Airbus A330neo economic performance against the Boeing 787-9. The passenger comfort was similar to the A350 NPS in a 10-abreast cabin.
NMA Freighter. Credit: Leeham Company LLC
We now turn our attention to another aircraft family, the Boeing 767. Until a few weeks ago, Boeing’s product development team worked on a 767-sized airplane. The program would start with a freighter, the NMA-F, followed by the passenger variant.
However, comments from Boeing CEO Dave Calhoun at the Boeing annual investor conference indicated there are no plans to launch such a program. Funding for such a program was reduced.
Despite Boeing’s announcement, we still thought it relevant to look at the 767 cross-section with a mindset of what could have been.
Summary
- No adequate OEM offering in the upper mid-market segment;
- The 767 cabin shoulder width;
- Comparing mid-sized aircraft capacity;
- A dwindling 767 freighter conversion stock.
China will accelerate development of its commercial aerospace sector
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The second of two articles.
By Scott Hamilton
Nov. 21, 2022, © Leeham Co.: Western aerospace companies that invested in China face challenging times ahead in a changing trade environment.
The COMAC C919 is a means to an end in the development of China’s commercial aerospace industry. Credit: Leeham News.
This is especially true for US companies. The overhang of trade and political tensions between the US and China makes for difficult times ahead. European companies are less threatened. Nevertheless, these face uncertainties as China strives to build its own commercial aerospace industry.
This effort “puts western companies that have made capital investments in Chinese capacity in a difficult situation just structurally because they have either JVs or WFOES (Wholly Foreign-Owned Enterprises) or other engagements with Chinese-based industrial assets that will be hard to navigate simply from a trade compliance perspective,” says Michael McAdoo, Partner & Director, Global Trade and Investment for Boston Consulting Group.
“Non-Chinese companies now have a very difficult environment to navigate versus a decade ago. I think there will be a huge push to create the capacity, for engines, for airframes, and for key systems.”
McAdoo The C919 essentially was China going shopping basically for what it considered to be best of breed and all these different technologies. The majority of these come from Western suppliers. Then they were integrated into China with some Chinese design and build structures, but even that structure had some western partners at various places.
Related articles:
Pontifications: Some Boeing product development engineers reassigned to 737, 787 lines to fix problems
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By Scott Hamilton
Nov. 21, 2022, © Leeham News: When Boeing CEO David Calhoun told his audience at the Nov. 2 investors day (and all those watching on the web) that there will be no new airplane introduced until the middle of the next decade, it was a shocker to some.
Wall Street analysts and investors loved the news. There would be no spike in research and development spending. Free Cash Flow—which is seemingly all that matters to analysts—was forecast to be $10bn by 2025-2026. Returning money to shareholders seemed to be restored as Boeing’s No. 1 priority. The stock price went up 18% in the week after the news.
Calhoun said there would not be a new engine before the middle of the next decade that would support the development of a new airplane. Calhoun ignored advances in airplane/wing design as a contributor to reducing fuel burn, however.
But, as the late radio commentator Paul Harvey used to say, “now, for the rest of the story.”
Since the Nov. 2 investors day, the first since 2018, LNA quickly learned that there was more than expressed at the investors day event.
Summary
- While officials pointed to continuing production challenges, mostly fingering the supply chain, this is only part of the story.
- Quality control slipped not only at the Charleston 787 factory, as has been widely reported. It remains an issue even today.
- Quality control is also a problem at the 737 Renton and 767 Everett factories.
- Quality declined in part because there are so many new hires to replace retirements, early buyouts, and layoffs. These new hires have a learning curve required that slows production and makes quality control challenging.
- Product Development engineers diverted to 737 and 787 production to resolve issues.
In the meantime, Calhoun purchased 25,000 shares of stock on Nov. 8 for approximately $3.87m. Insider purchases like this typically send a message to Wall Street and stockholders that the CEO (or whomever) has confidence in the company’s future.
The economics of a 787-9 and A330-900 at eight or nine abreast
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By Bjorn Fehrm
Introduction
Nov. 16, 2022, © Leeham News: Over the last weeks, we have looked at the economics of our typical long haul widebodies when fitted with normal and high-density seating.
We continue this series by comparing the Boeing 787-9 and Airbus A330-900, when both fly eight or nine abreast economy cabins. As before, we fly the world’s busiest long-haul route, London Heathrow, to New York JFK and look at the comfort and economic data.
Summary
- The 787-9 is the more capable aircraft with about 700nm longer range than the A330-900.
- The economics of the two on routes both can fly is close. It comes down to cabin layouts.