Leeham News and Analysis
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Outlook 2023: stabilizing operations at Boeing
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By Vincent Valery and Scott Hamilton
Introduction
Jan. 5, 2023, © Leeham News: LNA wrote a year ago that resuming Boeing 787 deliveries was among the top 2022 priorities for the American OEM. Despite taking longer than envisioned (until August), the resumption of Dreamliner deliveries proved to be the high point of 2022 for Boeing Commercial Aviation (BCA).
The resumption of 737 MAX operations in China has still not materialized, and clearing the inventory of aircraft produced during the grounding is taking longer than envisioned. Boeing does not expect Chinese carriers to take delivery of their 140 737 MAXes for several years.
While Boeing launched the 777-8F, the 777X had another significant entry into service delay. The EIS is scheduled for 2025, around five years later than envisioned at the program launch in 2013. In October, a new problem with the giant GE9X engine emerged. Analysis is underway by GE. Whether there will be any additional impact on EIS remains to be seen.
Certification of the 737 MAX 7 and MAX 10 appears to be on a path for success. In November, Sen. Maria Cantwell of Washington State proposed extending the deadline from year-end 2022 for compliance with legislative requirements to install a new system called EICAS. EICAS monitors the 737’s systems and guides pilots in handling faults. EICAS is not on the already-certified MAX 8 and MAX 9. The legislation was passed with the assumption that the MAX 7 and 10 would be certified before the effective date.
However, the factors that most impacted BCA’s ability to generate cash flows were supply chain issues and labor shortages. Boeing has still not stabilized production on the 737 line at the announced goal of 31 per month.
In light of all the above, what lies ahead for Boeing in 2023?
Summary
- Critical to stabilize aircraft production;
- Financial drag from the Defense, Space & Security division;
- Avoiding more material certification delays;
- EcoAviation and lack of new product developments;
- Competing for orders without launching a new aircraft
Outlook 2023: Labor shortages continue to plague aerospace
Boeing 777 final assembly line in Everett (WA). Credit: Leeham News.
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By Bryan Corliss
Jan. 4, 2023, © Leeham News: Some aerospace suppliers say the industry is dealing with a shortage of production workers, as well as engineers. Airbus, Boeing and other manufacturers, including engine companies, complain they can’t get to desired production rates because of, in part, a labor shortage.
It’s part of a broader phenomenon across all manufacturing, with one industry group saying there’s an immediate need for 2.1 million factory workers right now.
In some circumstances, this has meant raising wages. In Wichita, the “Aerospace Capital of the World,” there’s a bidding war going on for skilled aerospace mechanics. In Puget Sound, Boeing had to go back to the bargaining table with the Machinists Union in 2019, to negotiate $4-an-hour pay increases for entry-level workers. In Charleston (SC), Boeing reportedly struggles with a higher-than-normal attrition rate as workers leave for higher-paying jobs.
It seems inevitable that the lack of experienced workers will make it harder for companies to deliver parts and finished goods on time, and the absolute need to raise pay will cut into margins. Both these factors could very well be a drag on profits, even as airlines clamor for new aircraft that will increase manufacturers’ revenues.
Summary:
- Analysts warn of ‘labor headwinds’
- Spirit faced with ‘dynamic’ labor environment
- Boeing: 100 new mechanics a week?
- New-hire pay about the same as retail
- High turnover causes supply chain problems
Leeham News in addition to Twitter, Facebook and Linkedin, may now be found on Post.news here and on Mastodon here.
Outlook 2023: ramping up production at Airbus
Leeham News in addition to Twitter, Facebook and Linkedin, may now be found on Post.news here and on Mastodon here.
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By Vincent Valery and Scott Hamilton
Introduction
Jan. 2, 2023, © Leeham News: LNA wrote a year ago that ramping up single-aisle production would be Airbus’ major 2022 challenge. Increasing narrowbody aircraft production on the A220 and A320 lines proved more difficult than envisioned for the European OEM.
The war in Ukraine, which led to sanctions and higher energy bills, compounded the challenges for Airbus and its supply chain. Among the suppliers behind delivery schedules, engine manufacturers received the most attention earlier in the year. The situation has improved since then.
Airbus did not launch any new aircraft variants in 2022. While the A321XLR flight campaign started in June 2022, the program has accumulated a six-month delay. Entry into service is now planned for 2Q2024 instead of 4Q2023. The delays are caused mainly by the certification of the new rear center fuel tank into the fuselage.
Despite a production line full for several years, Airbus continued accumulating healthy numbers of A320neo orders, including from Chinese carriers. The cancellation of AirAsia X’s A330neo order improved the family’s order book quality. Net orders for the A350 family, including the freighter variant, have been muted but should pick up as long-haul traffic recovers. Airbus’ low point has been the ongoing court battle with Qatar Airways on the A350 paint issue, leading to the cancellation of the carrier’s order book.
Last but not least, Airbus announced many ecoAviation and sustainability initiatives throughout the year, culminating at its Annual Summit Nov. 30-Dec. 1.
Will 2023 be more of the same for the European OEM?
Summary
- Behind-schedule ramp-up on both single-aisle lines;
- New orders will determine the pace of the twin-aisle ramp-up;
- Avoiding further A321XLR certification delays;
- Robust cash flows allow sizable R&D spend on ecoAviation;
- No new product development and more A330neo orders?
Universal Hydrogen’s ATR72 Project
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By Bjorn Fehrm
Dec. 22, 2022, © Leeham News: Last week, we wrote about Universal Hydrogen’s (UH2) plans to fly a hydrogen-fueled demonstrator aircraft in early 2023, followed by a certified conversion kit for an ATR72 airliner mid-decade.
The plans for the ATR72 hydrogen conversion are at an advanced state. As the first publication, we can describe the overall design and the technical details. The ATR72 implementation brings improvements in several areas compared with what’s been revealed before.
Figure 1. Hydrogen tank modules are loaded onto an ATR 72 using standard freight handling equipment. Source: Universal Hydrogen.
Summary:
- The target ATR72 conversion improves hydrogen capacity and handling compared to earlier concepts.
- The influence on the ATR seating capacity is reduced due to more efficient packaging on the aircraft.
Suppliers expect Boeing to increase 787 rates next year
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By Bryan Corliss
Dec. 19, 2023, © Leeham News: Boeing suppliers are planning to increase their output to support the OEM’s plan to deliver five new-built 787s a month at some point in 2023.
Boeing wants to increase the production rate of the 787 to 5/mo by the end of 2023 and to 10/mo by 2025. The supply chain must hurry to prepare. Credit: Leeham News.
It will be challenging for the top-tier suppliers to scale up operations dramatically. They’ll have to train and maintain larger teams of workers, while also ensuring that their own lower-tier suppliers have the capacity to deliver parts and components on time.
One executive warned investors this fall that the challenges in the year ahead will be greater than the ones the industry faced delivering record numbers of planes before the pandemic.
Summary:
- Howmet: ‘Back of the year, at around 5 per month’
- Suppliers want more lead time given challenges
- Whole supply chain is under stress
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Universal Hydrogen could be first with Hydrogen Airliner
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By Scott Hamilton and Bjorn Fehrm
Dec. 15, 2022, © Leeham News: Universal Hydrogen (UH2) is perhaps weeks away from its first flight of a demonstrator that equips a De Havilland Canada Dash 8-300 with tanks of hydrogen and a fuel cell electric propulsion unit. The project shall prove the feasibility of hydrogen-fueled airliners.
The first flight’s date hasn’t been firmly set, but officials at UH2 told LNA it should be soon. Taxi tests of the aircraft will begin in the coming weeks. The flight will occur at Moses Lake in Central Washington State.
Universal Hydrogen supplies its hydrogen to the aircraft in prefilled barrel-sized tanks, called capsules, to avoid the lengthy and costly investment in storing and filling infrastructure at airports. The proof of concept is with a Dash 8, followed by a complete hydrogen conversion kit for an ATR-72 turboprop airliner.
Figure 1. Hydrogen tank pallets are loaded onto an ATR 72 by standard cargo loaders. Source: Universal Hydrogen.
Summary:
- The core business of Universal Hydrogen is the prefilled hydrogen tanks that load onto the aircraft in pallets.
- Universal Hydrogen builds the complete hydrogen fuel and propulsion system to prove and bootstrap the concept of hydrogen airliners.
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.