Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: Air Transport’s route to 2050. Part 13. March 14, 2025
- Rolls-Royce’s remarkable turnaround March 13, 2025
- NASA hit by DOGE layoffs, office closures; Boeing’s X-66A R&D continues for now March 11, 2025
- Boeing faces three labor contracts expiring this year March 10, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 12. March 7, 2025
Melrose sets ambitious profit targets, eyes defense boost
By Leeham News Team
Mar 6, 2025, © Leeham News: Melrose Industries, the parent company of GKN Aerospace, has unveiled ambitious financial targets, setting its sights on approximately £5 billion ($6.4 billion) in revenue and £1.2 billion in adjusted operating profit by 2029 after achieving profit last year at the top end of expectations despite industry-wide supply chain issues.
In its latest, full-year earnings report released Thursday, the company reported a 42% year-over-year increase in adjusted operating profit for 2024, to £540 million.
The UK-based aerospace company’s revenue also saw an 11% boost, reaching £3.47 billion, led by the engines division and its “buoyant aftermarket.”
Speaking to analysts, CEO Peter Dilnot said there was “good momentum for 2025” despite a “difficult time for the industry with supply chain challenges.”
“We will see another step up in profit and margins [this year] and complete our extensive restructuring program,” he added. Read more
Airbus 2024 results: “A decent year in a challenging environment”.
By Bjorn Fehrm
February 20, 2025, © Leeham News in Toulouse: The headline uses the words of Airbus CEO Guillame Faury when he opened the presentation of Airbus 2024 results in Toulouse today. It was a session where Faury and the CFO Thomas Toepfer put in an effort to let all present international journalists and their online colleagues ask all questions and deliver honest answers.
On the business-as-usual side, the company delivered 766 aircraft, which was within the guidance, after a deep grab effort in 4Q, leading to low deliveries for 1Q2025. EBIT at €5.4bn and Free Cash Flow at €4.5bn were also within guidance.
In general, the Commercial airplane side was fighting specific supply problems during 2024, which might limit the ramp-up of A350s and A220s going forward, more of which below. Helicopters have now recovered from challenging times and delivered a solid result. Defense and Space are strong in Air Power (fighters, etc.), given the tense European situation, with Space going through restructuring, which might include mergers with other European space players.
The real news was the reasons for pausing the CityAirbus eVTOL program, according to Faury, “not only because batteries were not where they should have been but also due to the lack of a market for this type of transportation.” As the world’s largest supplier of helicopters, Airbus is a credible source for such a lack of market statement.
Faury also detailed what is happening on the Hydrogen side. Due to slower-than-expected progress in Green Hydrogen production build-up, deployment of preparatory Ground Support Equipment (GSE), and Transportation using hydrogen at the airports in their H2 partner network, Airbus has decided to push out the entry into service of a “commercially viable hydrogen aircraft” by five to ten years.
However, said Faury, it has made progress. “We have reached TRL 3 for the tecnobricks, which has enabled us to select the Fuel Cell path as the preferred way forward. This means these activities are continued at the present level or even intensified, but it also means other paths (read Hydrogen burn) are ramped down. Overall, it means a decrease in R&D spending for Hydrogen activities in the coming years.”
Read more
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
Airbus 9 month 2024 results: Inventory build-up for Q4 and Space Business lowers results
By Bjorn Fehrm
October 30, 2024, © Leeham News: Airbus has presented its results for the first nine months of 2024. The operational result (EBIT Adjusted) is €0.8bn lower than in 9M2023, caused by an inventory increase of €7bn for Airbus Commercial compared with 9M2023 and a write-off of €1bn in the Airbus Space business during the first nine months.
Apart from these areas, group performance was as expected, with 495 commercial aircraft delivered, increasing Commercial revenues by 4% compared with 9M2023, Helicopter revenues by 5%, and Space and Defense revenues by 30%, mainly from the Air Power business.
Airbus announced a 9M2024 profit of 1,808m€ (2,332m€) on revenue of 44.5bn€ (42.6bn€).
Supply chain may be stabilising — but risks remain, says Accenture’s aerospace lead
Subscription Required
By the Leeham News Team
August 12, 2024, © Leeham News at Farnborough: After a period of intense disruption, the aerospace supply chain is showing signs of stabilisation, partly due to Boeing’s recent production slowdown, according to Accenture’s global aerospace and defense lead, John Schmidt.
Titanium is now a scarce material given the sanctions against Russia. All Airbus and Boeing airplanes use the material. Photo Credit: Leeham News.
The reduction in output has eased some pressure on suppliers, allowing them to catch up on backlogs and recalibrate operations. However, Schmidt warned this respite may be short-lived as new challenges loom on the horizon.
Geopolitical tension involving Western nations and Russia, and the Asia-Pacific region, risks raw material shortages that may disrupt the delicate balance once more.
“The supply chain has evolved and changed in terms of where the focus is since COVID,” noted Schmidt in a sit-down interview with LNA at the Farnborough Airshow in July. “It wasn’t too long ago that we couldn’t get chips – chips were holding things back. It seems like we’ve gotten ahead of that, and now we’re dealing with trying to find other sources of supply, and sometimes it’s an issue with quality coming in.”
“What’s next is going to be sources of supply for things like titanium? There is enough in the supply chain already that has insulated the impact, but we’re starting to see early indications that [titanium] might be the next thing that comes up.” Read more
Aircraft production woes stretch far beyond Boeing
Subscription Required
By Judson Rollins
June 17, 2024, ©. Leeham News: Estimating airplane delivery rates isn’t much more than a guessing game nowadays.
While many headlines point fingers at beleaguered Boeing and Spirit AeroSystems, aviation’s production woes are much more complex. Even in 2024, the labor shortage legacy of COVID-19 and raw material shortages exacerbated by the Russia-Ukraine war loom large over the industry.
Airbus struggles to deliver airplanes on time, and engine makers also see their deliveries constrained by supply chain issues.
Source: AFP via Aviation Week Network.
Summary
- Boeing commercial production is far below advertised rates.
- Airbus deliveries suffer from shortages of seats, other parts.
- Embraer says deliveries would be higher without supply chain issues.
- COMAC’s disruption opportunity is dampened by likely trade conflict.
- Pratt and GE Aerospace slowly ramp up delivery of redesigned components.
Airbus 1Q2024 results: Airbus CEO: “A350 in-service experience drives positive reputation and orders”
By Bjorn Fehrm
April 25, 2023, © Leeham News: Airbus has presented its results for the first quarter of 2024. The strong order flow continues, with a pickup on the widebody side, especially for the A350.
Airbus has, therefore, canned the rate 10 target for 2026 and aims for rate 12 in 2028, with a stronger mix of A350-1000s.
The company has a net cash position of €8.7bn and €30bn liquidity. Guidance for 2024 is unchanged, with 800 commercial aircraft delivered, an EBIT adjusted of €6.5bn to 7 bn, and a Free cash flow of €4bn.
Focus on quality not slowing innovation, says GKN
By Tom Batchelor
April 18, 2024, © Leeham News: The crisis at Boeing forced the entire supply chain to re-evaluate manufacturing processes and double down on quality control – but that is not yet stifling innovation, according to Peter Dilnot, CEO of Melrose PLC, the parent company of aerostructures and engine components supplier GKN Aerospace.
GKN Aerospace has undergone a restructuring that is now largely complete. Source: GKN
Melrose is most of the way through a comprehensive restructuring, and the company has emerged as a pure-play aerospace business that has consolidated production sites and exited “non-favorable” contracts.
“We don’t want to be everywhere,” explained Dilnot during a briefing in London attended by LNA this week, which was intended to set the scene ahead of July’s Farnborough Airshow.
“One of the reasons I think aerospace is so much in vogue at the moment is that it is one of the very few markets where you’ve got structural growth. Aerospace is unique in that we’ve got these long order backlogs, structural growth and as a result a growing top line for industry participants.”
From 50 production facilities pre-COVID, GKN is now down to 33, and it will soon be at 31 sites. Its four global technology centers remain in the UK, where it is headquartered, the US, the Netherlands, and Sweden.
The positioning of Melrose as a leaner business after the spin-off of its automotive unit is producing positive results. The company posted revenue of £3.35bn ($4.29bn) for 2023, 17% growth over the previous year, and adjusted operating profit of £420m (up from £186m in 2022), in its full-year results last month. Operating margin reached 12.5%, up from 6.3%, and profits of £700m are being targeted by 2025.
Read more
GKN Aerospace eyes further growth as earnings surge
By Tom Batchelor
Mar. 7, 2024, © Leeham News: Strengthening demand for airframe structures and engine components helped British supplier GKN Aerospace, a subsidiary of Melrose PLC, achieve higher profits and record margins in 2023.
GKN Aerospace has invested in its sustainable additive fabrication capability. Source: GKN
The company, whose supply contracts encompass all leading commercial narrowbody and widebody aircraft, as well as business jet and defence customers, announced full-year results on Thursday.
Melrose posted revenue of £3.35bn ($4.29bn), 17% growth over the previous year, and adjusted operating profit of £420m (up from £186m in 2022). Operating margin reached 12.5%, up from 6.3%.
The Birmingham, England-based group enjoyed growth within its engines division of 16%, and structures growth of 18%, largely from OEM deliveries ramping-up.
CEO Peter Dilnot told investors 2023 had been a “transformational” year with “profit more than doubling, ahead of expectations.”
He said order backlogs stretching nearly a decade across Airbus and Boeing lines, and a “significant gap” in time before next-generation platforms are likely to be introduced, had resulted in “something of a harvest period” for GKN.
The Airliner Production Problem, Part 2
Subscription required
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.
