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
Looking ahead for 2020 and 2030 decades: Boeing
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Second in a series.
By Scott Hamilton and Vincent Valery
Introduction
June 24, 2020, © Leeham News: “Airbus’ widebody strategy is a mess.”
This is what Kostya Zolotusky, then a VP with Boeing Capital Corp., said a few years ago on the sidelines of a major aerospace conference.
Today, it may be going too far to say there is increasing opinion in the industry that Boeing’s product strategy is a mess. But it’s fair to say it’s seriously challenged.
Even setting aside the 737 MAX grounding, Airbus clearly outpaced the MAX with the A320neo family. The A321LR and XLR thrust Airbus into dominance in the single-aisle, 150-220 seat sector.
Airbus fell into a winner with the acquisition of the Bombardier C Series. Boeing’s 737-7 MAX has captured fewer than 100 orders since the program launch in 2011. Demand for the 777X is weak.
Boeing critics, and there are many, see little but doom and gloom ahead. Even before the COVID-19 crisis, Boeing faced years of recovery from the MAX grounding.
There’s no doubt Boeing has a deep hole to climb out of, exacerbated by the COVID crisis. The question is, what does Boeing do after the MAX is returned to service and the virus crisis is over?
Summary
- Airbus is clear leader in single-aisle sector.
- Boeing’s product strategy for New Midmarket Airplane, Embraer role is over.
- Former CEO Jim McNerney said, “no more moonshots.” But is this just what Boeing needs to regain its position?
Boeing tells Spirit to pause 737 MAX fuselage production
June 11, 2020, © Leeham News: Spirit Aerosystems, maker of the Boeing 737 fuselages, yesterday said it will lay off 900 workers on the MAX line 
for three weeks.
“Spirit received a letter from Boeing directing Spirit to pause additional work on four 737 MAX shipsets and avoid starting production on 16 737 MAX shipsets to be delivered in 2020, until otherwise directed by Boeing,” the supplier said in a press release.
“Based on the information in the letter, subsequent correspondence from Boeing dated June 9, 2020, and Spirit’s discussions with Boeing regarding 2020 737 MAX production, Spirit believes there will be a reduction to Spirit’s previously disclosed 2020 737 MAX production plan of 125 shipsets,” the company said.
Spirit also is furloughing workers at two locations in Oklahoma.
Pontifications: Boeing focuses on design, production vs airplane development–for now
By Scott Hamilton
By Scott Hamilton
May 11, 2020, © Leeham News: Boeing killed development of its alphabet soup of airplane concepts for now.
“For now” is a relative term. When Boeing will be ready to show concepts to customers as a prelude to a program launch depends on how quickly the industry recovers from the COVID crisis.
But research and development of a streamlined production system, once key to new airplane projects, continues.
CEO David Calhoun said on the 1Q2020 earnings call that the New Midmarket Airplane (NMA) is essentially dead. He said in the following media call that the “differentiators” for the next new airplane from Boeing or Airbus will be manufacturing and engineering.
Updated with earnings call: Spirit Aerosystems reports 1Q loss, expect worse 2Q
By Scott Hamilton
May 6, 2020, © Leeham News: Spirit Aerosystems, a major supplier to Boeing and Airbus, reported a net loss of $163m for the first quarter.
The loss was a negative margin of 15.5% on revenues of $1.08bn, but it was better than analyst expectations.
With a majority of revenues coming from Boeing, the grounding of the 737 MAX continued to hit Spirit hard. The COVID-19 crisis further impacts the company.
Spirit will deliver 125 737 fuselages to Boeing this year, down from 216 previously agreed, reflecting the COVID crisis. This includes 18 delivered in January before production was suspended. Spirit did not reveal how many of 116 produced and stored in parking lots will be among the 125.
On the earnings call, Spirit said the the storage will grow somewhat, peaking in July-August. It will get back down to the 120s by year end. The inventory will decline in 2021 and “burn down” in the next two years.
Japan seeks to develop aircraft industry ties through Asian trade partnerships
By Judson Rollins
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April 20, 2020, © Leeham News: Japan has long been known as an engineering powerhouse, and Japanese manufacturing titans like Mitsubishi Heavy Industries and Kawasaki Aerospace have been a key part of Boeing and Airbus supply chains for the last two decades.
Japan’s government wants to expand the country’s influence by signing agreements with members of the Association of Southeast Asian Nations (ASEAN) to secure improved cooperation with downstream suppliers. Aircraft and engine OEMs and key tier-one suppliers already have manufacturing operations in Thailand, Singapore, Malaysia, Indonesia, the Philippines, and India.
The first of these agreements is expected to be signed with Malaysia, which declared its ambition to become the biggest aerospace producers in Southeast Asia by 2030.
On the sidelines of February’s Singapore Air Show, LNA met with representatives of Japan’s Ministry of Trade, Economy, and Industry (METI) to discuss the proposed agreement with Malaysia. This article has been withheld until now due to the myriad aerospace issues caused by the COVID-19 crisis.
Summary
- Bilateral agreement postponed due to COVID-19.
- Areas of cooperation include manufacturing, training and more.
- Malaysia’s growing aerospace footprint.
Boeing engineers voting on surprise contract extension
By Bryan Corliss
Feb. 25, 2020 © Leeham News — Unionized engineers and technical workers at Boeing begin voting this week on unexpected new contract proposals from the company that address two major areas of worker complaints LNA reported on last month: annual raises and paid family leave.
The proposals, which would extend the current contract by four years, came after SPEEA (the Society of Professional Engineering Employees in Aerospace) threatened to take Boeing to court over what it claimed were deliberate attempts by company management to hold down raises that engineers and tech were entitled to under the current contract.
Those threats led to talks between SPEEA’s executive board and Boeing managers, resulting in the proposed contract extensions.
SPEEA’s seven-member executive board negotiated the extensions and is urging a “yes” vote. However, the union’s larger Bargaining Unit Councils (one each for both the engineers and techs, with a combined total of close to 100 representatives) did not go along with the endorsements.
There are two separate but related offers, one for engineers and one for technical workers. Voting is by mail. Ballots will be counted on March 9. About 18,000 Boeing workers are involved, most in Washington, but also in California, Oregon and Utah.
Summary
- Union confronted Calhoun over pay on Day One
- Proposal locks in annual wage increases
- SPEEA gets family leave this year
Boeing 737 MAX 2020-23 backlog will require to 2026 to deliver: analysis
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Introduction
By Scott Hamilton
Feb. 14, 2020, © Leeham News: It will take Boeing years to deliver new production airplanes scheduled for delivery in 2020-2023 because the restart of the 737 MAX production will fall far short of delivery commitments.
There are an estimated 2,682 deliveries scheduled in this timeframe. Boeing’s production restart and ramp up provides delivery positions for an estimated 1,827 aircraft. This leaves an estimated 855 aircraft that will have to be rescheduled into the future, from 2023.
These will compete with Boeing sales for new order delivery slots. For example, the MOU for 200 MAXes from IAG, the parent of British Airways and other carriers, has delivery slots in these periods.
An analysis by LNA indicates it will take at least until 2026 to deliver these 855 airplane if no other orders are slotted in through 2025.
Airbus buys Bombardier’s share in A220, now sole owner together with the Government of Quebec
By Bjorn Fehrm
February 13, 2020, © Leeham News in Toulouse: The news this morning that Airbus is now the sole owner of the A220 (75%) together with the Government of Quebec (25%) is good news for the A220 and for Quebec.
Bombardier is a company in trouble and it was forced to try and save cash in the A220 partnership rather than invest in the future. This potential limitation on the A220 program is now resolved. Airbus gets sole responsibility for future plans and it has in the Government of Quebec a partner that will be positive to the growth of the A220 as it means more business for the Quebec aeronautical industry.
Boeing 737 production rate boost to 57/mo delayed by four years
- Plan called for 737 rate to go to 57/mo YE 2019.
- This rate won’t be achieved until 2023.
- Rate reduction considered for 777.
By Scott Hamilton
Feb. 5, 2020, © Leeham News, Lynnwood (WA): Suppliers attending the annual conference of the Pacific Northwest Aerospace Alliance say they gained some clarity from Boeing last week about future production plans for the 737 MAX.
But they still face a multi-year challenge that puts strain on everyone.
Boeing’s plans to return to the pre-grounding production rate of 52/mo will take until 2022. Plans to boost the rate won’t be fulfilled until 2023—four years later than planned.
Boeing looks to produce about 220 MAXes in 2020
By Scott Hamilton
Jan. 30, 2020, © Leeham News: Boeing appears preparing to produce around 220 737 MAXes this year.
Spirit AeroSystems announced this morning that it reached agreement with Boeing to supply 220 fuselages in 2020.
The actual number of MAXes Boeing produces this year may vary from 220. It could well be that some of the 2020 fuselage deliveries spill over into 2021 deliveries.
