Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- FAA understaffing affects air operations oversight; NTSB falls short, too January 13, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 4. January 10, 2025
- The market is ready for a 787F. But is Boeing? January 9, 2025
- 2025 remains another year for recovery in commercial aerospace January 6, 2025
- Boeing touts safety progress but opposes SPEEA initiative January 3, 2025
UPDATED: Boeing says it still will deliver up to 450 737s this year
Boeing Co. photo
By Bryan Corliss
April 26, 2023, © Leeham News — Boeing says it will increase rates on the 737 line in Renton to 38 a month to maintain its plan to deliver between 400 and 450 737 MAX jets to airlines this year.
That was the first line of the company’s first-quarter earnings release, which showed Boeing lost $149 million on the quarter, on revenues of $17.9 billion.
Boeing had optimistically aimed for jumping MAX rates from the current 31 a month, as soon as June. However plans for the 737 line had been in question, after recent revelations that manufacturing problems and a software issue would cause delays in deliveries.
- ‘Gnarly’ 737 defect to take weeks to fix
- Boeing commits to MAX increases
- Improving numbers at BCA
- Supply chain issues continue, Boeing says
Spirit gearing up to produce 42-a-month on 737 program by the end of 2023
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By Bryan Corliss
Feb. 8, 2023, © Leeham News – Spirit AeroSystems plans to deliver 42 new-built 737 MAX fuselages a month to the Boeing Co. by the end of this year, executives said Tuesday.
Whether that’s how many 737s Boeing is delivering to customers is not for Spirit to say, CFO Mike Suchinksi told analysts during the company’s year-end earnings call.
“What Boeing delivers to their customers is, we have no purview. That’s on the Boeing side,” he said. “We’re just trying to communicate to you what the contract schedules have been and what we expect to produce internally and what we expect to ship to Boeing and to get paid for.”
But Spirit and its suppliers still have major challenges to overcome before they can get to those higher rates, Suchinski and CEO Tom Gentile warned. The company, which struggled through a tough year in 2022, is making major cash outlays in early 2023 to acquire the people and materiel it will need to reach those higher rates, and that will weigh on profitability for the next few quarters.
- Losses doubled in fourth quarter
- Outlook: 420 737s and 650 A320s
- Some suppliers in ‘deep distress’
- Spirit hiring, but new workers need time
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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
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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
Leeham News in addition to Twitter, Facebook and Linkedin, may now be found on Post.news here and on Mastodon here.
Boeing faces exodus of senior engineers in tight market for talent
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By Bryan Corliss
Nov. 28, 2022, © Leeham News: Boeing’s engineering corps could become further depleted within the next few days, as union-represented engineers and technical workers at the company’s Puget Sound plants face a Wednesday deadline on filing their retirement paperwork.
If they don’t leave now, individuals could face retirement benefit losses in the hundreds of thousands of dollars.
The potential loss of several hundred of Boeing’s most experienced engineers comes at a time when the company is scraping together engineering teams to tackle production problems in Charleston, and in the midst of an industry-wide shortage of engineering talent.
Summary
- Aggressive hiring sparks Brazilian lawsuit
- Engineers face Wednesday deadline
- All aerospace companies need engineers
- Tech industry layoffs won’t help
Read more
UPDATE: Spirit close to breakeven in a ‘dynamic’ environment, CEO says
By Bryan Corliss
Nov. 3, 2022, (c) Leeham News: Spirit AeroSystems said today its third quarter revenues grew by 30% year-over-year, driven by an increase in deliveries for Boeing’s 737 MAX program.
The company posted positive operating income of $4.5 million for the quarter – its first positive income since 2019 – but reported an overall net loss it said was due mainly to charges connected with the cost of terminating an employee pension plan.
Spirit said it delivered 69 Boeing 737 shipsets during the third quarter — 23 a month — compared to 47 shipsets in third quarter 2021.
Boeing deliveries are expected to be stable at 31 a month for the foreseeable future, Spirit President and CEO Tom Gentile said.
“Given that our production rate is set at 31 aircraft a month on the 737 program now, and we will likely remain at that rate for much of 2023, we are initiating a focused effort to reduce structural costs to enhance our profitability and cash flow in 2023,” Gentile said in the company’s earnings release.
The company faces challenges, however. “We continue to see disruptions in our factories due to part shortages, increased levels of employee attrition and volatile schedules,” Gentile said.
Spirit, which had reduced its quarterly dividend to 1 cent a share in 2020, said it will suspend dividend payments entirely starting in the fourth quarter, “due to the current challenging macroeconomic environment.”
SUMMARY
- Labor and supply chain issues ‘dynamic’
- Spirit to slowly work through 737 backlog
- Defense diversification helps bottom line
- More demand for spares and maintenance
Pontifications: Suppliers don’t lack for demand, but haven’t recovered from Pandemic crisis
By Scott Hamilton
Oct. 3, 2022, © Leeham News: Aerospace suppliers don’t lack demand. But they still have a long way to go to recover from the crisis brought about by the COVID-19 pandemic. The pandemic began in earnest in March 2020. While largely under control today, there are still COVID variants sending people to hospitals and deaths.
Jeff Knittel, the president of Airbus Americas, homed in on the fundamental question during the US Chamber of Commerce Aerospace Summit last month in Washington (DC). Knittel moderated a panel with suppliers Tom Gentile, CEO of Spirit Aerosystems, and Paolo Dal Cin, Senior Vice President, Operations, Supply Chain, Quality, Environmental, Health, and Safety for Raytheon Technologies.
“Is this the beginning or the end or the end of the beginning in terms of [supply chain] disruptions?” Knittel asked. “This has been painful for everyone, and outside our industry also. Where do you see us today in terms of the recovery and next steps for you and the industry?”
“I would say that the recovery has started for the supply chain, but we still have a long way to go,” said Gentile. At the July Farnborough Air Show, there were few orders announced. The whole story was the supply chain.
Spirit AeroSystems seeks bigger role in aftermarket
By Scott Hamilton
May 5, 2022, © Leeham News: Spirit AeroSystems has had a tough couple of years. It’s not only had COVID to contend with, but its customer that provides more revenue than any other—Boeing—had a major impact on Spirit’s revenues and profits.
Boeing’s 737 MAX crisis, suspension of deliveries for the 787 and extended delays in the 777X programs all hurt Spirit. The Tier 1 supplier makes the fuselages for the 737s. It makes the nose sections for the 787 and 777. Spirit’s 737 production rate is now 31/mo. Deliveries for the 787 are expected to resume in the second half. Boeing said it will gradually increase production from the current rate of about 0.5 per month to 5/mo (though the timeline remains murky). Production of the 777X is suspended through 2023 while that for the 777-200LRF probably will hover around 2/mo for the indefinite future.
In its 1Q22 earnings release on May 4, Spirit appears on its way toward solid recovery. The company beat street expectations on strong Airbus deliveries, for which it’s also a supplier. Spirit’s own operational improvements and below-the-line improvements contributed to the better than expected results. And free cash flow was stronger than expected. The earnings detail is here.
Pontifications: The reshaped commercial aviation sector
By Scott Hamilton
July 12, 2021, © Leeham News: With Washington State and the US open for business following nearly 18 months of COVID-pandemic shut-down, there is a lot of optimism in commercial aviation.
In the US, airline passenger traffic headcounts are matching or exceeding pre-pandemic TSA screening numbers. Airlines are placing orders with Airbus, Boeing and even Embraer in slowly increasing frequency.
The supply chain to these three OEMs looks forward to a return to previous production rates.
It’s great to see and even feel this optimism. But the recovery will nevertheless be a slow if steady incline.
HOTR: Airbus, Boeing R&D spending continues decline
By the Leeham News Team
Nov. 5, 2020, © Leeham News: Research and Development spending by the Airbus and Boeing commercial units declined year-over-year.
The movement is in keeping with cost-cutting by the Big Two OEMs. For Airbus, the reduction is due to the coronavirus pandemic. For Boeing, it’s due 
to the 737 MAX grounding and the pandemic.
Boeing’s spending typically lags Airbus. Richard Aboulafia, a consultant with Teal Group, for years criticized Boeing over its smaller spending, favoring instead shareholder value. Airbus overtook Boeing is innovative single-aisle airplane development years ago. Boeing’s choice of creating a 777 derivative instead of a new design to compete with the A350-1000 proved to be a weak move. There are only a handful of customers and the skyline is weak.
