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By Dan Catchpole
The U.S. Air Force accepted the first of five T-7A Red Hawk test aircraft from Boeing on Sep. 14th. (Image courtesy of USAF and Boeing Co.)
October 23, 2023, © Leeham News: Wall Street analysts expect Boeing to post its biggest quarterly loss of the year when it reports its third quarter earnings on Wednesday. The company’s commercial and defense divisions continue to struggle with rework, slow work, supply chain snafus, and other challenges for both its commercial and defense and space divisions. Those divisions’ losses likely will be offset somewhat by Boeing Global Services, which continues to be a bright spot on the company’s otherwise blood-red ledger book.
Analysts aren’t expecting any big surprises, just more of the same financial dark clouds that have been camped out over Boeing in recent years. They expect Boeing to announce a loss due to well-known challenges, especially with its 737 and 787 programs, as well as ongoing struggles within Boeing Defense, Space and Security. In recent research notes, investment analysts have forecast BDS posting a loss between $475m and $500m for the quarter.
Across Boeing’s divisions, Wall Street expects the company to book more than $1bn in losses. Projections vary by as much as $1bn. At the low end, TD Cowen expects a loss of just under $900m. At the other end, Bernstein projects about $1.85bn in losses. In either case, that would be the biggest loss since 2022’s third quarter, when Boeing posted a $3.3bn loss.
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By the Leeham News Team
Oct. 19, 2023, © Leeham News: Airbus and Boeing have airplane order backlogs exceeding 10,000 aircraft. Most of the respective production lines are sold out to 2026 and even beyond 2030. Airlines and lessors must place orders soon to get into the queue. If early delivery positions are sought, the customers must hope Airbus and Boeing can find a few slots—but there won’t be many.
Like airlines selling their seats, Airbus and Boeing overbook production slots. The OEMs bet on boosting production rates, customers willing to defer deliveries (for whatever reason), cancellations to open earlier slots, or to meet delivery commitments. These bets sometimes pay off—and sometimes they don’t.
Today, LNA looks at the Top Boeing Customers of each product line and assesses the risk factors of whether these carriers will likely take delivery of their orders. We looked at Airbus’ Risk Orders on Oct. 16.
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By the Leeham News Team
Oct. 16, 2023, © Leeham News: Airbus and Boeing have airplane order backlogs exceeding 10,000 aircraft. Most of the respective production lines are sold out to 2026 and even beyond 2030. Airlines and lessors must place orders soon to get into the queue. If early delivery positions are sought, the customers must hope Airbus and Boeing can find a few slots—but there won’t be many.
Like airlines selling their seats, Airbus and Boeing overbook production slots. The OEMs bet on boosting production rates, customers willing to defer deliveries (for whatever reason), cancellations to open earlier slots, or to meet delivery commitments. These bets sometimes pay off—and sometimes they don’t.
Today, LNA looks at the Top Customers of each product line and assesses the risk factors of whether these carriers will likely take delivery of their orders. We’ll do the same for Boeing.
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By Bjorn Fehrm
October 12, 2023, © Leeham News: We do an article series about what can be the next development for Airbus’ most popular aircraft, the A321neo. We started with the base data last week to understand the present aircraft and its limitations.
Now, we use our Airliner Performance and Cost Model (APCM) to look at possible changes that can increase the capacity and efficiency of the aircraft and what can be achieved at a reasonable cost.
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By Scott Hamilton
Oct. 9, 2023, © Leeham News: Earnings season reporting is about to start and there are some key things to look for. The first companies, including Boeing, begin reporting the week of Oct. 23.
A few companies already raised red flags. Boeing said it will report a loss in the third quarter, which ended Sept. 30, because of problems at Spirit AeroSystem. Spirit Aero builds the entire fuselage for the Boeing 737 and the nose sections for the Boeing 787, 777, and 767/KC-46A. Spirit Aero has been plagued with quality control issues, delaying deliveries and requiring rework of planes already produced or in final assembly at Boeing.
When Spirit Aero sneezes, Boeing can catch the cold.
The aforementioned problems continue to push Spirit Aero into financial disarray. LNA has reported extensively on its financial condition and trends.
Another Spirit, the US-based ultra-low-cost airline, is also headed in the wrong direction. LNA doesn’t normally cover airline earnings—there are plenty of outlets that do—but in this case, Spirit Airlines has a major outstanding order from Airbus. Spirit Airlines is also the subject of a merger application with JetBlue, another major Airbus customer.
Spirit Airlines recently adjusted its third quarter guidance significantly downward. It now forecasts a 3Q loss margin of 14.5% to 15.5%, nearly triple the same period last year. A year ago, LNA expressed concerns over the proposed merger between JetBlue and Spirit (JetBlue was the bidding company). Our concerns have deepened. JetBlue may be well advised to exercise a clause that is presumed to be in the merger agreement: Material Adverse Change. Withdrawing from the merger may well be the best course for JetBlue. Acquiring Spirit Airlines may well be a financial black hole for JetBlue.
The supply chain remains stressed. As in the case of Spirit Aero and Boeing, if any key supplier falls down on the job, the Original Equipment Manufacturer (OEM) catches cold.
Here’s a rundown of companies to watch.
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By Bjorn Fehrm
October 5, 2023, © Leeham News: We look at what can be the next development for Airbus’ most popular aircraft, the A321neo. We looked at the history of the A320/A321 last week and how the aircraft progressively were updated to take more passengers and fly longer sectors.
The series represents more than 50% of the revenue and margin for Airbus. With the latest development, the A321XLR, soon finished, what is next? We use our Airliner Performance and Cost Model (APCM) to look at base data and what changes are necessary to increase capacity and efficiency further.
By Bryan Corliss
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Oct. 2, 2023, © Leeham News – Tom Gentile is out as CEO of Spirit AeroSystems, the victim of a number of serious production missteps and a failure to lead the Tier 1 supplier into a stronger position following the Covid-19 pandemic and the grounding of Boeing’s 737 MAX.
The new interim CEO is Pat Shanahan, a long-time Boeing and Pentagon executive who has been serving on Spirit’s board since 2021.
Spirit said its board is conducting a search for a new chief executive.
Related Article:
Breaking News: Tom Gentile, the CEO of Spirit, is out. He’s been replaced by Pat Shanahan, a Spirit Board member, on an interim basis while the search for a permanent CEO is underway. Shanahan is a former Boeing executive and former deputy secretary of the US Department of Defense. This story will be updated.
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By the Leeham News Team
Oct. 2, 2023, © Leeham News: Boeing is in another bad spot with a major contractor and the depth of the problems is quickly becoming apparent. Spirit AeroSystems in Wichita has been seriously underperforming with inspection escape after inspection escape seriously hampering Boeing’s ramp-up of the 737 rate.
Spirit isn’t making money on Boeing 737s and 787s. Boeing is charging Spirit for rework, and a glance through Spirit’s second-quarter earnings report was full of items where they did not have a firm handle on their losses and future exposures attributable to operations with Boeing.
Spirit’s repeated quality and production problems led to speculation that Boeing might buy Spirit, to bring direct control over the Wichita (KS) plant back in-house. Spirit was once “Boeing Wichita.” It was sold on orders of then-Boeing CEO Harry Stonecipher. The resulting spin-off, Spirit, remained Boeing’s supplier for all the commercial airplanes then in production. Nose sections were supplied for all but the 737. Spirit produced the entire 737 fuselage and does to this day. Boeing has a workforce in place at Spirit to help sort out the problems.
At the Paris Air Show, Boeing shot down the speculation, saying purchasing Spirit wasn’t going to happen. Since then, more quality control and production issues emerged on the 737. Two-thirds of the 737s in inventory and an unknown of aircraft in service or new production models are affected.
Speculation over the possibility of Boeing purchasing Spirit continued. Doing so would not be simple, even if Boeing was so inclined.
LNA takes a deep dive into the issues.
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By Bjorn Fehrm
September 28, 2023, © Leeham News: We recently looked at the latest developments around Airbus’ A321XLR certification. When the certification is completed, it extends the A321 to a true Trans-Atlantic airliner.
After the A321XLR, what will be Airbus’ next development? A clean sheet replacement for the A320/A321 series won’t be needed until Boeing replaces the 737 MAX family next decade, and we have described why we think an A220-500 will not happen anytime soon.
The A320/A321 is Airbus main source of revenue and margin. It would, therefore, be a logical focus for further development to keep the success going into the next decade. But what can be done? Is the A321neo with the A321LR and XLR the end of the development of the A321? We use our Airliner Performance and Cost Model (APCM) to analyze A321 fundamentals and look at how to increase capacity and efficiency further.