Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing reports mixed results of latest employee survey, but middle management and officers remain key obstacles April 22, 2025
- Hopes for 1Q financial progress turns into bumpy ride for Boeing April 21, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 18. April 18, 2025
- Natilus: Composite BWB, entry-into-service by 2029, 570 on order April 17, 2025
- China bans Boeing, US parts imports in tariff war April 15, 2025
2025 remains another year for recovery in commercial aerospace
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By Scott Hamilton
Jan. 6, 2025, © Leeham News: Don’t look for any dramatic new product launches in 2025.
Nor should you expect any dramatic news, absent global upheaval of some kind.
This year is going to be yet another year dominated by recovery. Recovery from the COVID-19 pandemic, which officially ended in 2022. Recovery by the supply chain. Recovery for Pratt & Whitney’s nearly decade-long problems with its Pure Power GTF engines supplying the Airbus A220, A320 family and Embraer E2 jets. Recovery by Airbus from its production and delivery delays. Recovery by Boeing from its series of self-inflicted crises, now beginning the sixth year.
There is just no getting around the fact that the commercial aerospace industry isn’t a smooth-running industry. It’s a long way from 2018, when all sectors were running smoothly. There is still a long way to go to recovery.
Here’s LNA’s take on what’s to come this year.
A decade to normal? Delivering every airplane in backlog won’t clear debt to 2018 levels
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By Karl Sinclair
Dec. 20, 2024, © Leeham News: In 2018, the Boeing Company (BA) delivered a whopping 806 commercial aircraft to customers.
That year, the corporation declared revenues of $60.715bn at Boeing Commercial Aircraft (BCA) and an operating margin of $7.879bn.
Operating cash flow was $15.322bn and Free Cash Flow (FCF) was $13.6bn.
2016 was the last year that Boeing did not have a negative net debt position (cash and cash equivalents less short and long-term debt).
In 2018, Boeing increased its net debt position by ($4.158bn), year over year, while spending $12.946bn on buybacks and dividends.
It borrowed money to give to shareholders.
Fast-forward to the end of 3Q2024. Boeing was forced to raise $21bn in a stock offering on Oct. 28, with $57.65bn in total debt and a ($47.18bn) net debt position.
How long will it take Boeing to get back to a position where it can invest in a much needed clean-sheet design to replace the beleaguered 737 MAX family?
Lilium on the clock to survival or dissolution
Update, Jan. 4, 2025: A German investment group will pump €200m+ into Lilium, purchasing all its assets.
By Scott Hamilton
Dec. 19, 2024, © Leeham News: Lilium, one of the earliest battery-powered eVTOLs, has two weeks to raise €1m to give it more time to fully reorganize—or on Jan. 1, the company moves into dissolution.
Lilium filed for bankruptcy in the US and insolvency under German law in November. As a German company, its future is governed by much stricter insolvency laws than in the US where bankruptcy laws give the debtor wide latitude and almost unlimited time to reorganize.
Under German law, Lilium has until Dec. 31 to raise €1m to tide it over while substantial funding is raised or a merger with a healthy partner can be arranged.
Lilium has an order and commitment book for more than 700 of its eVTOL, a 6-8 passenger Advanced Air Mobility (AAM) design that is flown by one pilot. The advertised range is enough to fly from New York City to Philadelphia. Lilium calls the AAM an electric jet, but in reality the powerplants are electric motors—a lot of them.
Lilium’s “jet” eVTOL battery-powered aircraft. Credit: Lilium.
But Lilium has gone through $1.1bn. It pays its executives handsomely, with critics complaining that they are way overpaid for a start-up company with no revenue. It purchased the former Dornier executive offices and built three big hangars to house parts and components, pre-production and final production.
Lilium bought the former Dornier headquarters at Munich’s research airport, and built three hangers. Critics point to this expense as an example of overspending. Credit: Lilium.
Critics say Lilium’s design is impractical, far behind schedule, and has yet to undergo meaningful flight testing.
Be that as it may, the company believes that German politics got in the way of approving a $100m Bavarian state loan that was a prerequisite for an equal investment from private sources. The critics say Lilium’s spending and executive pay played a role in Bavaria’s rejection.
“What’s past is prologue.” –William Shakespeare.
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By Scott Hamilton
Dec. 16, 2024, © Leeham News: A new airplane from Airbus or Boeing is years away.
Engines drive whether a new airplane program makes sense. Technology just isn’t “there” yet. In any event, Boeing can’t afford to fund a new airplane program even if it wants to. Furthermore, until its stored inventory of 737s and 787s are cleared, or mostly so, production rates are back to 2018 levels, debt is substantially reduced, and profits and cash flows return, Boeing is mired in recovery from the past. Addressing the future must wait.
Airbus has no incentive to rush into a new airplane program, even if engine technology was available. Its backlogs extend into the 2030s, and it can’t meet the current demand. Production is mired in delays for the A320 and A350 families.
Both companies, and Embraer, remain adversely affected by supply chain parts delays.
Airbus CEO Guillaume Faury previously said he doesn’t see the company moving forward with a new airplane until 2035-2040. Additional insight into the company’s thinking came last month at the Aviation Forum 2024 in Munich, where vice presidents of Airbus’ propulsion and new programs departments outlined what’s ahead.
Boeing, Airbus still struggle with supply chains and personnel shortages
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By Scott Hamilton
Dec. 13, 2024, © Leeham News: It’s been two years since the generally accepted end of the COVID-19 pandemic. But the aerospace industry hasn’t fully recovered. Nor will it do so for some time to come.
Predictions suggest another year or two will be required to restore pre-pandemic employment levels within the supply chain. This isn’t even certain. What is certain is that the impact of inexperienced new hires in the meticulous aerospace requirements will linger on for years to come.
Michael Haidinger, President of Boeing European and Middle Eastern regions. Credit: Boeing.
Michael Haidinger, president of Boeing’s European and Middle Eastern regions, and Juergen Westermeier, chief procurement officer for Airbus, agree challenges remain in the near future.
“There is always a shortage of skilled aerospace talent intensified by the pandemic,” Haidinger said this month at the annual Aviation Forum (2024) in Munich, Germany. “As all the professionals retired, fewer new employees entered the field. Our industry needs more people who not only bring expertise but also embrace the mission of advancing aerospace.”
Haidinger added, “The deficit of skilled engineers, technicians, and other aerospace workers has made ramping up production more challenging. Attracting and retaining talent has become a top priority for us. [We are] with many companies investing in workforce development, partnerships with universities, training programs, and apprenticeship programs.”
Airbus procurement head “convinced” supply chain issues are on right path
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By Scott Hamilton
Juergen Westermeier, head of procurement for Airbus. Source: Airbus.
Dec. 12, 2024, © Leeham News: Airbus wants to sharply increase the production rates of its A220, A320, and A350 lines between now and 2027. This has been a goal since emerging from the COVID-19 pandemic.
However, continuing supply chain issues repeatedly moved the targets to the right. The A220 production rate goal of 14/mo was moved from 2025 to 2026. A dramatic increase in the A320 family rate to 75/mo is now set for 2027, a delay of more than a year. The new production target for the A350, 12/mo, is now 2028.
Increasing the rates is key for Airbus to meet demand and take full advantage of Boeing’s continuing disruptions as it works to emerge from its long-running safety, quality assurance, and production disruptions.
Airbus officials have been frustrated by the repeated delays in ramping up production and obtaining a reliable stream of parts deliveries from the supply chain. Annual delivery goals are challenging to meet and have fallen short of guidance. Airlines and lessors are unhappy over missed delivery dates.
But the head of Airbus’ procurement believes things are, at long last, on the right track.
Juergen Westermeier explained why in an interview with LNA last month during the Aviation Forum 2024 in Munich.
Global instability poses questions for aerospace industry
By the Leeham News Team
Dec 9, 2024, © Leeham News: The global aerospace sector is facing significant uncertainty as geopolitical tensions, including trade disputes and security concerns, weigh heavily on sections of the industry.
China Southern Airlines plans to sell its 787-8s, but will hang onto its 787-9s. How Chinese airlines proceed from here is not certain. Credit: Boeing
A new administration in Washington (DC), and the impact that may have on the Ukraine war and relations with China, alongside a rapidly evolving situation in the Middle East, will likely alter the balance further in 2025.
A lot has already been baked in, but the industry is still grappling with how each scenario may unfold.
“I’ve been feeling for a while that Boeing’s prospects in China are pretty bleak,” says Bruce McClelland, a senior analyst at market analysts Teal Group, when asked how he expects the next few months will play out for OEMs.
“[Chinese customers] will probably take delivery of a few 737s, and maybe some 787s that are currently on order or may have been built already But I think that China, increasingly, for a number of reasons, doesn’t necessarily need all the Boeing planes that it might have thought it would need.” Read more
Start-up hybrid plane OEM MAEVE teams with MHIRJ for sales, more
By Karl Sinclair
Dec. 5, 2024, © Leeham News: Start-up company Maeve last week signed a collaborative agreement with MHIRJ to provide sales and potentially product support for its proposed 80-seat M80 hybrid-electric commuter airliner.
Maeve has administrative headquarters in The Netherlands and technical headquarters in Munch. MHIRJ is the old Bombardier CRJ regional jet global product support system headquartered in Canada.
MHIRJ will lead Maeve’s sales effort for the new M80 and instantly give Maeve credibility in potentially offering a reliable product support system. MHIRJ also has global access to airlines via the CRJ program, which Maeve lacks as a start-up.
If things go as planned, Maeve will see the launch of the first clean-sheet turboprop aircraft in over three decades. The M80 is scheduled to undergo a critical design review by the beginning of 2028, make its first flight in 2030, and enter service in 2032.
“That’s the timeline that they’re still working towards, and that’s why they brought us on, to start looking at their design, from all aspects,” said Ross Mitchell, Senior Vice-President of MHIRJ, in an interview with LNA.
MHIRJ is a fully owned subsidiary of Mitsubishi Heavy Industries (MHI) and is the result of Mitsubishi’s 2020 acquisition of the CRJ Series program.
“MHIRJ is the largest MRO for regional aircraft in the world,” said Mitchell. “The [US labor contract] Scope Clause is a little more complicated than some people think, and because we had that experience dealing with Scope Clause over the years, we can certainly advise them on how to make sure your airplane is most suitable for the US market.”
MAEVE’s proposed M80 hybrid-electric 80-seat airliner. Credit: MAEVE.
Scope Clauses limit the size and number of passengers a regional aircraft can carry and exist between mainline carriers and their respective pilot’s unions. The most common clause among the Big Three is a maximum take-off weight of 86,000 lbs and a seating limit of 76 passengers.
Production increase delays hurt Airbus costs
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By Scott Hamilton
Dec. 2, 2024, © Leeham News: Boeing gets all the attention for late deliveries, higher costs, and bloated staff. However, Airbus isn’t immune to similar problems.
Late deliveries and missing delivery targets are well known. Supply chain issues, which Airbus and Boeing have identified, are one problem. Engines delivered late by CFM, GE, Pratt & Whitney, and late interiors from Safran and Collins (among others) are most often cited. But other suppliers down the food chain also struggle to keep up with pressure to increase production rates. Many are still coping with workforce shortages rooted in the COVID-19 pandemic recovery.
Boeing has a bloated workforce. Last month, it began laying off 10% of its 170,000 person workers.
Airbus also has a bloated workforce. However, under European labor laws, it can’t freely implement layoffs like its US rival can.
The result: productivity per employee suffers, and costs climb. A review of the Commercial division’s employee headcount provides a stark picture.
The Commercial unit had 22.7% more employees at the end of 3Q2024 vs Dec. 31, 2022, when the pandemic was widely considered to be over. It has 23.8% more employees than on Dec. 31, 2020, when the pandemic was in full swing.
Slow, methodical process to restore Boeing’s trust, efficiencies
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By Scott Hamilton
Nov. 28, 2024, © Leeham News: Boeing’s path forward will be slow progress, as the company recovers from a 53 days strike by its largest union, the International Association of Machinists and Aerospace workers, official said Tuesday.
“Where do we stand as Boeing today? Now that our IAM teammates are back, we have the task of resuming production. And it’s much harder to turn things on than to turn lines off,” said Michael Haidinger, president of Boeing’s European and Middle Eastern regions.
Michael Haidinger. Credit: Boeing.
Haidinger appeared before the Aviation Forum 2024, a suppliers-oriented conference held this year in Munich.
“It’s critical for us and for [suppliers] that we do that right. We cannot afford another mistake in our production system. Therefore, our safety and quality management system will guide us and determine the speed through this production restart in the Seattle region in the very near future.”