Leeham News and Analysis
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Leeham News and Analysis
- Bjorn’s Corner: New aircraft technologies. Part 41. Production learning curve December 8, 2023
- Re-engining the Boeing 767 December 7, 2023
- Boeing returns to PNAA December 5, 2023
- Pontifications: Embraer sees easing in pilot shortage, wave of sales coming December 5, 2023
- Airbus: Global services sector to double by 2042 December 4, 2023
Immense Commercial Airframe Shipments Growth Supercharges ATI’s Q3 Earnings
By Chris Sloan
Nov. 1, 2023, © Leeham News: Aerospace and Defense (A&D) revenue increased to a company record of 61% of airframe material maker ATI’s Q3 sales, up from 51% a year ago – firmly on its way to the company’s stated 65% target.
ATI’s titanium product for commercial airframe shipments took the supplier’s checkered flag with a 25% sequential and 55% YoY growth, driven by both single and dual-aisle airframe production rate increases. “Shipments of airframe materials surpassed $200m in the third quarter. That’s up more than 50% from the third quarter last year. It’s a new record for us, surpassing our prior Q2 2019 high watermark,” boasted ATI Bob Wetherbee, Board, Chair and CEO.
Titanium has proven its metal in justifying the restart of four furnaces at its Oregon facility to expand capacity by 35% over its 2022 baseline. ATI projects this full run rate will command an additional $50m in titanium revenue per year.
“In just 12 months, total ATI titanium sales are up approximately 75%. It’s an incredible ramp, with strong demand and customer commitments. In some cases, we’re the only game in town. Stronger bottom-line results are clearly ahead for us. It’s a pretty exciting time to be part of ATI,” said Wetherbee.
Howmet Aerospace Exhibits Strong Revenue Growth Driven By Commercial Aerospace, Girds For OE Rate Increases
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By Chris Sloan
Nov. 1, 2023, © Leeham News : Howmet Aerospace reported third-quarter revenues of $1.66bn, up 16% year over year, primarily driven by growth in commercial aerospace of 23%. Overall, the company achieved an improved margin of 23% EBITDA, propelled by surging demand from OEs across all three aerospace segments: Engine Products, Fastening Systems, and Engineered Structures.
“Commercial Aerospace has grown for 10 consecutive quarters and stands at 49% of total revenue. Its growth continues to be robust, supported by demand for new, more fuel-efficient aircraft as well as increased spares demand,” proclaimed John C. Plant, Howmet’s Executive Chairman and Chief Executive Officer
A chorus of analysts agreed Howmet beat consensus “This was another quarter where Howmet’s results stand out relative to its commercial aero peers, especially compared to other OE [Original Equipment] suppliers. In 3Q, Howmet delivered beats on sales, margins, EPS, and raised its guidance for all three metrics,” said Melius Research in a note. “What is arguably more impressive is that Howmet did this in a quarter where the operating environment was far from smooth.”
Q3 Earnings: Hexcel’s Composites Rides The OEM Production Rate Ramp Up Wave, But Margins Pressures Persist
By Chris Sloan
Oct. 25, 2023, © Leeham News – Hexcel Corporation, a tier four carbon fiber supplier best known for its significant contributions to all-composite Boeing 787 and Airbus A350s, reported substantial overall Q3 revenues despite inflationary and production efficiency pressures. While active in other industrial programs like space and defense, industrial applications, and carbon fiber auto wheels; commercial airspace accounts for the bulk of Hexcel’s total sales. Overall, third-quarter revenue increased by 19.2% to $251.9m year-over-year.
“Hexcel continues to benefit from the post-pandemic travel recovery and from the growing pull for newer, more fuel-efficient lightweight aircraft to meet that demand and to replace aging fleets,” commented Hexcel Chief Executive Officer and President Nick Stanage during the Q3 earnings call. The company perceives itself as well positioned to supply the combined Airbus and Boeing backlog currently tallying at a record 13,775 aircraft.
The company maintains that over the next three years, build rates for narrowbody aircraft are expected to increase by nearly 50%, and build rates for widebody aircraft are expected to almost double. Stanage insists the OEMs won’t be waiting on Hexcel, like they are at others at all supply chain tiers. “This is both a challenge and a great opportunity, and Hexcel is determined to be ready to ensure our products are produced efficiently and delivered on time to our customers,” maintains Stanage. The CEO further bullishly adds, “This is truly a great time to be in the business of manufacturing lightweight composite materials.”
The Airliner Production Problem, Part 2
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By Bjorn Fehrm
September 19, 2023, © Leeham News: The Airliner OEMs can’t increase their production rates as planned after the pandemic, and it’s become clear it’s not a short-term problem. We started looking at the root causes of the difficulties last week.
We looked at the complex puzzle the production of a modern airliner is and the importance of the learning curve for the result. Now, we analyze the effects that the pandemic had on airliner production and why things are not the same as before the pandemic.
Figure 1. The Boeing 737-8 is sold out for years. Source: Boeing.
Summary:
- Last week, we looked at the importance of skills in the supply chain and their influence on production rates.
- Now, we analyze what happened with skill levels in the industry before, during, and after the pandemic.
The Airliner Production Problem
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By Bjorn Fehrm
September 14, 2023, © Leeham News: For more than a year, we have heard all the Airliner OEMs complain that they can’t increase production rates because of delivery problems in their supply chain. It’s a problem that is not easy to fix; it just goes on and on.
What is the root problem behind the persistent problem of increasing production of our airliners? There are specific problems for each aircraft type and time, but some fundamental problems are behind the overall problem of increasing the production numbers.
We analyze these fundamental problems in a series of articles.
Figure 1. The Airbus A321, a model which a new customer gets delivered six years from now if the production increases to plan. Source: Airbus.
Summary:
- We start describing the realities of airliner production, and what a gigantic puzzle it is.
- We also delve into the learning curve, and why it has such importance for production rates.
Bjorn’s Corner: New aircraft technologies. Part 29. Detailed design
By Bjorn Fehrm
September 8, 2023, ©. Leeham News: We described the Preliminary design phase of an airliner development program over the last weeks. Now our project is transitioning into Detailed design.
It’s the most challenging part of the project as we now go from perhaps a thousand people involved at the OEM into tens of thousands and even more people at consultancies and suppliers.
Figure 1. A new airliner family development plan. Source: Leeham Co.
Bjorn’s Corner: New aircraft technologies. Part 28. Alternative Preliminary design
By Bjorn Fehrm
September 1, 2023, ©. Leeham News: We described the Preliminary design phase of an airliner development program last week. One could say this was the classical way that aircraft projects conduct Preliminary design.
There is a different way that Conceptual and Preliminary design can be run. It’s more along the lines of pre-development of functions, as a reader commented on two articles back.
Figure 1. An alternative new airliner family development plan. Source: Leeham Co.
Bjorn’s Corner: New aircraft technologies. Part 26. Airliner development program
By Bjorn Fehrm
August 18, 2023, ©. Leeham News: We started last week to look at how to make the development of a new airliner family more efficient.
First, we describe how development projects are phased and how many people with what competencies are engaged in each phase. Then we can start the discussion of what changes can be made and what would be the consequences.
Figure 1. The JetZero Blended Wing Body that USAF partially funds to prototype. Source: USAF and JetZero.
The reality behind the eVTOL industry’s hyperbole, Part 4.
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By Bjorn Fehrm
August 3, 2023, © Leeham News: We look at the promises that the VTOL industry has made in their Investor prospects and the reality as they come closer to Certification and Production.
After looking at claims of range and utility, we now look at the operating economics. To do that, we need to predict the net sales price of these machines. We use our Aircraft Performance and Cost Model (APCM) to predict the production cost over time and, thus, the needed net sale price of the VTOLs.
Figure 1. The Archer Aviation Midnight VTOL mockup at the Paris Air show. Source: Leeham Co.
Summary:
- The VTOLs are big; the Archer Midnight is the size of a nine-seater commuter aircraft (Figure 1). Aircraft costs are related to size and weight.
- VTOLs use aeronautical production methods and supply chains for parts and systems. The production costs are, therefore, predictable.
UPDATE: Spirit says 737 manufacturing errors will disrupt deliveries through July
By Bryan Corliss
March 3, 2023 © Leeham News – The manufacturing errors its team made on Boeing 737 MAX fuselages will cost Spirit AeroSystems at least $31 million to fix, with work on the units still at the Wichita factory going on until the end of July, the company reported this morning.
But that’s just the start, Spirit executives warned.
“Additional costs are expected, including costs Boeing may assert to repair certain models of previously delivered units in their factory and warranty costs related to affected 737 units in service,” the company said in its quarterly earnings release.
The time and cost to make those repairs will have to be determined on “a unit-by-unit analysis,” Spirit said, adding that it “cannot reasonably estimate the remaining potential costs at this time.”
Repairs to the fuselages on hand in Wichita will cost $100,000 to $150,000 each, the company estimates. Spirit has revised its manufacturing process and implemented new quality controls, the company said.
Overall, Spirit reported an operating loss of $95 million for the quarter, which more than doubled its losses in the first quarter of 2022. The growing losses came even though Spirit increased revenues by 22% year-over-year, to $1.4 billion.
Spirit said that since the close of the quarter on March 30, it has received $230 million in cash advances from customers, of which $180 million has come from Boeing. It will receive another $50 million in advances later this year. Spirit is to repay those advances in 2024 and 2025.
- Some 750 737s to be inspected, may need rework
- Spirit to increase 737 rates in August, October
- Deliveries to Airbus to be down this year
- ‘Fragile’ supply chain remains an issue
- ‘Primary object is to reward our IAM colleagues’