Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
- Focus on quality not slowing innovation, says GKN April 18, 2024
- Boeing defends 787, 777 against whistleblower charges April 17, 2024
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
- Bjorn’s Corner: New engine development. Part 3. Propulsive efficiency April 12, 2024
2023 Boeing Financial Results: $41m earned at BCA–(or was it?)
- Airbus 2023 earnings are announced on Feb. 15.
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By the Leeham News Team
Feb. 9, 2023, © Leeham News: On January 31, Boeing released its year end results for the fiscal year and despite the entire company ending up in the red, analysts and investors alike pointed to the bright spot at Boeing Commercial Airplanes (BCA). Positive margins and earnings of $41 million. Some good news finally, after five years of less than stellar results.
Boeing has been beset by problems since its last profitable year in 2018:
- Two 737 MAX crashes and subsequent grounding, leading to a buildup in inventory.
- 787 delivery stoppage and a further build-up in inventory, with a $3.5bn write-off.
- 777X certification delay and a $6.5bn write-off.
- Numerous and costly production missteps.
The slide continued into 2024 when a 737 Max 9 door plug blew out during an Alaska Airlines flight, leading to increased scrutiny by regulators and further delays to the Max 7 and Max 10 certification process.
With the earnings release, there was some good news amongst the rubble; BCA was finally beginning to turn things around in the right direction, posting positive margins and a gain of $41 million. Not earth-shaking, but a small measurable baby step towards profitability.
Boeing to Suppliers: FAA audit of 737 could change production schedule, but stick to plan for now
[Ed. note: The headline and top of this story have been reworded for clarity.]
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By Dan Catchpole
Boeing’s Ihssane Mounir talks to suppliers at the 2024 Pacific Northwest Aerospace Alliance conference.
Feb. 8, 2024 © Leeham News: The head of the Boeing Commercial Airplanes supply chain told suppliers to keep making parts for the 737 MAX at the existing production schedule while the Federal Aviation Administration scrutinizes Boeing’s production of the single-aisle jetliner. He added that the production pace could be affected by the FAA’s audit results, which are expected in March.
“I would ask all of you to bear with us,” BCA senior vice president of Global Supply Chain and Fabrication Ihssane Mounir said at an aerospace supplier conference on Wednesday. “Let us get through this process with the FAA, the audit process, and see what the findings are and how we mitigate those findings…and what it’s going to take to get back to the production rates as we forecasted them before.”
The current schedule has the 737 production lines going to 42 airplanes per month starting this month. However, in the wake of a door plug panel blowing out of a two-month-old 737 MAX 9 flown by Alaska Airlines, the FAA on Jan. 24, told Boeing it could not increase the production rate past 38 airplanes per month. The planemaker already had been struggling to deliver that many MAXes each month.
Mounir said quality and safety trump every other concern and that Boeing and its suppliers have to get back to basics when it comes to ensuring quality. For the time being, he told suppliers, “If you have an issue, please call, and we’ll work with you.”
Summary
- Mounir: Quality trumps everything else
- Boeing urges suppliers to voice concerns
Boeing’s orders and deferred production costs: a deeper look
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By Judson Rollins
Introduction
Feb. 5, 2023, © Leeham News: After last week’s release of the 2023 annual report for Boeing, we undertake our annual analysis of at-risk deals on the OEM’s books.
This year, we also look at Boeing’s deferred production costs in light of the well-documented commercial aircraft production issues. During the company’s earnings call, Boeing CEO David Calhoun and CFO Brian West discussed plans to close its “shadow factories” or rework facilities for the 737 MAX and 787. Calhoun said, “In our shadow factories, we put more hours into those airplanes than we do to produce [them] in the first place.”
These growing rework costs appear to be classified as deferred production costs to keep them from affecting Boeing’s announced profits. We explain below.
Summary
- Program accounting hides ballooning program costs.
- War and geopolitical tensions increase regional risks.
- Certification delays to the 737-7 and -10 significantly increase Boeing’s MAX order risk.
- The 787 order book is relatively healthy despite geopolitical and customer risks.
- 777 & 777X orders are weighed down by geopolitical issues and a soft cargo market.
Aerospace Metals lead ATI’s Q4 Earnings
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By Chris Sloan
Feb. 1, 2024, © Leeham News: 
Aerospace continued its upward trajectory share of Allegheny Technologies’ overall business, the metals marker reported in its fourth-quarter earnings call.
“We made significant progress toward our strategy of aerospace and defense leadership, reaching 63% of total sales from those markets in the fourth quarter, up 10 percentage points over last year,” said Robert S. Wetherbee, Board Chair and CEO – noting the company is closing in on its 65% target.
Overall, ATI’s Q4 sales of $1.06bn were up 5% year over year. Full-year 2023 sales increased by 9% to $4.17bn over 2022. “ATI delivered a strong finish to 2023, with the highest quarterly revenue of the year,” reported the chief executive.
ATI is managing challenges up and down the supply chain and within its own house, including materials input costs inflation, furnace maintenance and outages, inventory control, Pratt’s GTF troubles, and the continued saga of changes in MAX production rates and deliveries, which have only become cloudier. “Aerospace and defense is a complex industry, and we’re living in complicated times,” A seemingly unphased Wetherbee admits. Yet, he remains confident despite “demand signals aren’t always clear.” ATI doesn’t “cast or melt anything that doesn’t have a specific order, so it must be ready to meet demand as it comes. A relentless campaign of “debottlenecking everywhere” underpins the business model.
Re-engining the Boeing 767, Part 4
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By Bjorn Fehrm
February 1, 2024, © Leeham News: We have been looking at a re-engine of the 767, a move that Boeing is considering to avoid a production stop after 2027. The present 767 engines don’t pass emission regulations introduced by the FAA, EASA, and other regulators for production and delivery beyond 2027.
We used our Aircraft Performance and Cost model to look at the economics of the original 767 Freighter versus a re-engined one before Christmas. Now, we install a passenger long-range cabin and look at the per-passenger mile economics of a re-engined 767-300ER versus the original version.
Summary:
- New, more environmentally friendly engines would give the 767-passenger version better fuel economics.
- The higher the engine maintenance costs of the new engines make the Cash Operating Costs difference between the existing 767-300ER and the new version small.
Instead of progress, Boeing must deal with new crisis of Alaska Flight 1282 on Wednesday’s earnings call
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By Scott Hamilton and Judson Rollins
Jan. 29, 2024, © Leeham News: Twenty-twenty-four will be a crucial year for Boeing.
A door plug blew off a Boeing 737-9 MAX Jan. 5. The company must deal with the fallout on its 2023 year-end earnings call Wednesday. Credit: Capt. Chris Brady.
An unexpected twist is the crisis from Alaska Airlines Flight 1282, in which a door plug blew off a 737-9 MAX at 16,000 ft. Nobody died, and injuries were light. But the MAX 9 fleet was grounded in the US by the Federal Aviation Administration. The FAA launched a formal investigation into the “quality escape” that is believed to have led to the accident. Last week, the FAA put a freeze on current production rates of the 737 and, for now, killed Boeing’s plans to add a line at its Everett (WA) plant.
Beyond dealing with the 1282 aftermath, Boeing hopes this year to clear its inventory of 737 MAXes and the 787. Clearing the inventories brings cash and some profits. But will this move to the right while Boeing is under even more scrutiny by the FAA?
Boeing planned to be positioned for 2025 to pay down debt incurred during the MAX grounding and the COVID-19 pandemic. Progress toward free cash flow targets of $10bn per year by 2025/26 was forecast at its Nov. 2, 2022, investors day. This is almost certainly inoperative.
Certifications of MAX 7 and 10 may take hit from 737-9 grounding
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By Scott Hamilton
Jan. 22, 2024, © Leeham News: The grounding of the Boeing 737-9 MAX is likely to delay certification of the 737-7 and 737-10, customers fear.
At a minimum, certification of the 737-7 is likely to shift by months, customers suggest. Certification of the MAX 7 has been repeatedly shifting. Boeing hoped that certification would be achieved in 2022 or 2023. It’s now 2024. In December, Boeing asked the Federal Aviation Administration (FAA) for an exemption to safety standards for a deicing of the leading edge of the composite engine nacelle. There already was opposition from some pilot unions to this request. Now, with the Jan. 5 grounding of the MAX 9 due to the Alaska Airlines Flight 1282 decompression, some believe this exemption won’t be granted.
Flight testing for the MAX 7 is all but done. Boeing hoped to deliver the first MAX 7s to launch customer Southwest Airlines this year.
Flight testing for the MAX 10 is in its early stages. Certification processes were suspended during the MAX grounding, which ended in November 2020. Testing has been slow since because there are only a few MAX 10s available for testing, and due to the slow certification process for the MAX 7. One MAX 10 customer fears certification will be delayed 6-12 months. This would shift deliveries from early 2025 to later in the year or into 2026.
Outlook 2024: Milestone year for alternative energy development
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By Scott Hamilton and Bjorn Fehrm
Jan. 18, 2024, © Leeham News: Twenty twenty four is 10 years after the Sustainable Aircraft discussions started when Airbus flew its battery-powered E-Fan before the world’s OEMs and press in July 2014 at the Farnborough Air Show.
The time that has passed is longer than the normal development time for a new aircraft, and what have the hundreds of projects that started in the wake of the E-Fan achieved? We have one new two-seat trainer, the Pipistrel Velis Electro, in production, but not much else.
A typical urban air mobility vehicle concept.
There has been no lack of electric airplane project announcements, one more fanciful than the other. Operational ranges and economics that will enable the replacement of the typical regional turboprops have been presented, but the two functional demonstrators we have in the air that go beyond nine seats are hydrogen fuel cell aircraft, not battery-electric or hybrid electric.
We have hybrid five and nine-seat commuters flying in prototypes, and a couple of hybrids will start production during the year. These will reach the market in 2025 or 2026, but how operationally viable these is still not clear. But beyond nine seats, there are only plans, no projects that plan to fly prototypes this year or next.
The one-battery electric project, Eviation Alice, flew once, then packed up, declaring we needed better batteries. It’s clear the job of exchanging the hydrocarbon combustion engine for aircraft is much harder than thought. The problem is that aircraft are supposed to fly for hours, and the energy density of normal fuel is still 50 times higher than for batteries.
Outlook 2024: Can ATR finally achieve its production target?
By Judson Rollins
Jan. 15, 2024, © Leeham News: For the second year in a row, ATR fell short of its stated production targets.
ATR delivered just 25 new aircraft in 2022 and 35 in 2023. The latter was five short of its stated target. In early 2023, the manufacturer said supply chain and staffing shortages were the two main reasons for its 2022 shortfall. It has not yet discussed what went wrong last year.
At last year’s Paris Air Show, ATR said it wants to deliver 80 aircraft per year by 2026. However, this seems unrealistic given the OEM’s current order book of 176 aircraft, according to recent data viewed by LNA.
ATR STOL test aircraft. Source: v1Images.com.
Summary
- Turboprop demand forecasts seem questionable.
- ATR is delaying its timeline for a new eco turboprop.
- Progress continues on a future STOL variant.
2024 Outlook: A Mixed Bag for Propulsion OEMs
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By Chris Sloan and Gordon Smith
January 11, 2033, © Leeham News: In 2023, a slew of problems plagued propulsion providers, with Pratt & Whitney’s GTF Engine and supply-chain shortcomings grabbing the bulk of negative headlines and customer complaints. There were bright spots for all the big three with a slew of significant orders, emerging technologies, and critical management shifts.
As the calendar turns to 2024, all eyes will be on a return to fulfilling enormous backlogs, supporting OEM production rate increases, and returning GTF-propelled planes to the skies – while edging towards new technologies, both incremental and revolutionary.
Summary
- Pratt and its operators navigate massive AOGs (aircraft on ground) and unhappy customer claims for its GTF.
- The GTF Advantage closes in on EIS.
- GTF maladies open the door to a possible new platform, the long-mooted Airbus A220-500.
- The X66A Tranonic-Truss-Braced Wing offers promise for both Pratt’s GTF and GE’s future RISE engines.
- GEnx and GE-9X win blockbuster campaigns on the 787 and 777X as the 777X hurtles toward certification.
- CFM’s LEAP goes from strength to strength on the heels of MAX orders and 737-7 and 737-10 certification and entry-into-service.
- Fixing LEAP durability and delivery challenges.
- Rolls-Royce Trent troubles continue to draw the ire of customers.
- UltraFan testing moves forward in Roll’s quest to build a next-generation engine platform for the 2030s. Read more