MAX impact on Boeing NMA beginning to emerge

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Introduction

May 2, 2019, © Leeham News: There was indication last week Boeing’s decision on whether to approve the New Midmarket Airplane program will slide.

CEO Dennis Muilenburg said on the company’s first quarter earnings call the focus is returning the grounded 737 MAX to service.

A decision on authorizing the sales force to offer the NMA for sale is ambiguous. For the first time, targeting 2025 for entry into service appears to be acknowledged as iffy.

The statements confirm LNA’s analysis and our reports that the 2025 EIS is unlike.

Summary
  • Advanced manufacturing is key to NMA production, but all elements need to fall into place—a “production moonshot.”
  • For more than a year, LNA and others predicted the NMA EIS in 2025 is not possible.
  • Engines won’t be ready by 2025 EIS. See here and here from March 2018.
  • Latest woes from CFM on the LEAP add to uncertainty; CFM is the favorite for NMA. See here.
  • Engine selection by Boeing put off until after MAX problems solved, grounding lifted.
  • Authority to Offer for sale at Paris Air Show unlikely and 2025 EIS now in doubt.

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Latest engine problem means NMA EIS slides

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Introduction

April 22, 2019, © Leeham News: If there remains any doubt that Boeing’s prospective New Midmarket Airplane (NMA) won’t be ready for entry into service (EIS) by 2025, it should be dispelled by now.

The grounding of the 737 MAX March 13, which is likely to continue well into the summer, will delay any launch of the program—should Boeing proceed.

The Board of Directors is unlikely to approve Authority to Offer (ATO) the NMA for sale as long as the cash flow for the MAX is outgoing and not in-coming.

Although this has its own impact on the NMA timing, it’s not the critical factor.

Last week, it was revealed that the CFM LEAP engine on the MAX (and the Airbus A321neo) has a problem called coking, which led to the contained engine failure of a Southwest Airlines MAX being ferried from Orlando (FL) to Victorville (CA) for the grounding of the Boeing airplane (see here and here). It’s the latest in a long line of engine maker problems with their current generation of powerplants.

This issue is unrelated to the MAX MCAS grounding. It also affects some engines on the A320neo family.

Summary
  • CFM is considered the favorite to power the NMA.
  • All four engine makers remain under stress and recover modes.
  • Rolls-Royce dropped out of NMA competition in December.
  • LNA reported in March 2018 the engines needed to be the focus for the NMA launch. See here and here.

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Delta Tech Ops 5-year goal to double revenues

#MROAM

Ed Bastian, Delta Air Lines CEO.

April 9, 2019, © Leeham News: Delta Air Lines has the third largest third-party MRO company in North America and aggressively seeks to grow, in sharp contrast to its competitors.

While American and United airlines have limited their own maintenance, repair and overhaul, let alone seek third party business, Delta Tech Ops is a business unit and profit center. Delta CEO Ed Bastian said today that Tech Ops will achieve $1bn in revenues this year and has a goal of $2bn within five years.

Bastian was the lead-off speaker at the Aviation Week MRO Americas conference in Atlanta this week.

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Pontifications: Delays, design creep, cost overruns–nope, it’s not an airplane program

By Scott Hamilton

March 11, 2019, © Leeham News: It’s late. There have been creeping delays. There’s been design creep. There were unknown unknowns. It’s way over budget.

No, it’s not a new airplane program, though the parallels are quite apparent.

It’s our new house.

After a three year process, including changing builders, going through the city twice, hitting expensive unknowns and facing rising costs, today is finally, finally, moving day.

It’s been a horrible experience I wouldn’t wish on anyone.

This will sound familiar to Airbus, Boeing, Bombardier, Mitsubishi, Rolls-Royce, Pratt & Whitney and, to a lesser extent, GE and CFM. Only Embraer can say it finished on time and on budget.

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Boeing’s 777X analyzed, Part 4

By Bjorn Fehrm

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Introduction

March 07, 2019, © Leeham News: In our analysis series about the Boeing 777X, it’s time to look at the performance of the 777-9 and 777-8 and compared them to their main competitor, the Airbus A350-1000.

Figure 1. First flight test Boeing 777-9 with the GE9X engines mounted. Official roll-out is set for March 13th. Source: Boeing.

Summary:
  • The 777-9 is a larger and heavier aircraft than the A350-1000. Its wide wing and efficient engines compensate the added weight when compared with the A350-1000. Both have best-in-class fuel efficiencies.
  • The “cut and shut” 777-8 has the same capacity as the A350-1000. Here the wings, engines and empennage from the 777-9 give it Ultra Long Haul capabilities. In normal route use, this capability weighs on its fuel efficiency.

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Rolls cites timing, analysts cite poor financial condition for NMA withdrawal

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Introduction

March 4, 2019, © Leeham News: Rolls-Royce last week announced it had withdrawn from competition for the Boeing NMA engine provider, citing a mismatch in timing between its Ultra Fan being ready and Boeing’s desired entry into service.

Warren East, the RR CEO, glossed over other reasons, but they were there: the program making commercial sense and the impact of the Trent 1000 engine challenges.

Aerospace analysts interviewed by LNA and whose research notes were provided have other reasons.

Summary

  • After dissecting RR’s financial statements, with special charges, accounting changes and Free Cash Flow analysis, some analysts concluded the company simply doesn’t have the money to develop the engine for the NMA.
  • Although CEO East glossed over the Trent 1000 issues, some analysts feel this was more important than let on.
  • CFM, according to one analyst (and many observers), believes it is the favorite for the NMA engine selection, so RR bowed out.

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Pontifications: Doubts continue over Boeing NMA launch

March 4, 2019, © Leeham News: Another week, another NMA story.

For an airplane that doesn’t exist, the prospective Boeing NMA continues to dominate much of the aerospace news.

By Scott Hamilton

Last week’s announcement by Rolls-Royce that it withdrew—in December, as it turns out—from the competition to power the NMA prompted a flurry of stories in aerospace media, including LNA.

Some stories suggested RR’s withdrawal meant Boeing was getting closer to launching the airplane.

Boeing, in January, said Authority to Offer might come this year and program launch had moved from 2019 to 2020.

Two prominent consultants predicted at the Pacific Northwest Aerospace Alliance conference last month the odds were 60-40 or 65-35 Boeing would proceed.

Maybe, but I have to tell you that conversations I had last week in the wake of the Rolls announcement are not encouraging.

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Transcript: RR told Boeing before end of 2018 it’s out of NMA competition

Feb. 28, 2019, © Leeham News: The announcement today by Rolls-Royce that it has withdrawn from the competition to provide an engine for the Boeing New Midmarket Airplane came as a surprise.

Warren East, CEO of Rolls-Royce. Source: Youtube.

This leaves CFM and Pratt & Whitney as the remaining competitors.

RR’s withdrawal wasn’t the only surprise.

CEO Warren East revealed Boeing had been notified shortly before the end of 2018.

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Airbus appears poised to launch A321XLR

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Introduction

Feb. 25, 2019, © Leeham News: The longer Boeing dithers on launching the New Midmarket Airplane, the harder it is to close an already difficult business case.

News last week that Airbus finally, at long last, is appears about to launch its Xtra Long Range A321XLR this year is overdue. Doing so will make Boeing’s NMA business case more difficult to close.

The aircraft should have been launch in late 2017, an insider told LNA recently. But the corruption scandals enveloping Airbus disrupted plans and drove executives to indecision. Launching the A321XLR was put on hold.

Summary
  • Killing the NMA.
  • A321XLR details.
  • Narrow market.
  • Engine down select soon.

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Pontifications: March is a critical month for engine OEMs

By Scott Hamilton

Feb. 25, 2019, © Leeham News: Even as Boeing put off a decision whether to launch the New Midmarket Aircraft until 2020, next month could be an important milestone—not only for the program but especially for the engine makers.

Unless delayed, engine down-select is supposed to be made in March.

This is a critical decision that could have huge implications to one of the engine OEMs—Rolls-Royce.

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