Odds and Ends: 787 Update; SPEEA Council meets for membership vote; Asian caution

787 Update: The Wall Street Journal has this lengthy article on the twin-investigations of the US and Japanese authorities into the Boeing 787 incidents. (Subscription required.) Bloomberg News this long article profiling Boeing CEO Jim McNerney’s oversight of the Boeing probe. The Seattle Times has this article about the probe.

This story takes a different angle on the 787 challenges, focusing instead on the coming shortage of engineers.

SPEEA Council Meets Today: The top officials of SPEEA, Boeing’s engineers’ union, meets today to decide on sending the Best and Final Boeing offer to members for a vote to approve or disapprove the contract. A strike vote is also likely to be included.

Caution on Asian Airlines: Germany’s DVB Bank, a major player in commercial aerospace financing and analysis, raises caution about the growth plans of the new Asian airlines, according to this article by Reuters.

American logo reaction mixed: Forbes has this story about the new American Airlines livery, quoting a number of design professionals. This link has a number of suggestions, almost of which which we like better than the tail paint American purchased for God knows how much money.

Predict: What will be the most momentous event of 2013?

2013 stands to be a pretty eventful year, and we’ve listed thoughts for you to vote on. We’ll hide results until voting is complete.

Now a key question: SPEEA and Boeing are on a collision course. Talks resume Jan. 9, but SPEEA already is on record believing talks will immediately collapse. A strike date of Feb. 1 is targeted, but membership has to take a strike vote before a walk out can occur. It’s your turn to vote:

If a contract agreement is not reached, will SPEEA actually go on strike or will talks continue?

TSA move to replace body invaders a good one

The news that the Transportation Security Administration is swapping out the invasive body x-ray scanners with other equipment is good news indeed.

Setting aside the debate over whether the levels of radiation to produce x-rays is a health risk, the images created were truly invasive to personal privacy. We went out of our way to look for TSA lines where only magnomitors were in use in order to avoid the x-ray body invaders and as often as not requested a pat down if only the body invader was in use.

Europe has long used machines that produce stick figures of the person going through the machine, and little round dots to highlight areas that required pat downs. We had no issue with these machines.

The stick figure machines will reduce the number of invasive pat downs as well. Hopefully this will speed the entire security process.

[youtube http://www.youtube.com/watch?v=bLqZknQ6GcQ&w=560&h=315]

And another:

[youtube http://www.youtube.com/watch?v=q3yaqq9Jjb4&w=560&h=315]

Around the world in 5 minutes

This has nothing to do with aviation (except implicitly that’s how Matt got from one place to another) but this is just so darn cool, we have to share it.

[youtube http://www.youtube.com/watch?v=Pwe-pA6TaZk&w=560&h=315]

And here are outtakes from the trip.

[youtube http://www.youtube.com/watch?v=l4quCAG4eCc&w=560&h=315]

Boeing rolls out Ray Conner to analysts

Boeing rolled out Ray Conner, the new CEO of Boeing Commercial Airplanes, to analysts in New York yesterday. The first research note we’ve received, from Imperial Capital’s Ken Herbert, portrayed a positive meeting. Below is a synopsis. As we receive more notes, we’ll add those comments.

We don’t like the resumed policy of using cash to repurchase stock, instead of putting it into new airplane programs (something Richard Aboulafia of the Teal Group, normally a pro-Boeing consultant, has roundly criticized for years).

Imperial Capital

We believe BA is benefitting from several tailwinds, and is demonstrating increased confidence regarding its 787 execution and the ability to take further costs out of the supply chain. However, we believe much of the good news is reflected in BA stock, and we see slowingorders in 2013 as limiting the multiple; therefore, we are maintaining our In-Line rating. Investors areexpecting a significant dividend increase or share repurchase program, which could be a positive catalyst, but we see the new program developments, which include the 737MAX, the 777X and 787-10, as potential competing cash pulls.

Regarding the 787, Boeing confirmed that Charleston is ahead of plan, but that it has been staffed to over deliver. Boeing also made a point of stressing that its movement down the cost curveon the 787 will be similar to that of the 777. We believe that there is an opportunity for Boeing toexceed expectations on the 787.

We continue to believe, however, the much of the execution upside is priced into Boeing stock. We believe that in order for the stock to see material upside, Boeing needs to demonstrate a very bold use of the expected free cash flow, in the form of both increased dividend and share repurchases, that will attract new investor interest and accelerate the EPS growth. However, this will limit the new product development options, considering the potentially competing development requirements of the 737MAX, the 787-10, and the 777X. We believe current BCA leadership wants to do both the 777X and the 787-10, and believes that there is significant pent-up order demand for both new aircraft, but we believe the focus on share repurchases and/or the dividend, reiterated at the 8/28/12 reception, could push some development effort to the right.


  • A reader posted this link on NEO vs MAX orders and options and we think it so good we’re elevating it to a primary post. This website also recaps which airlines have switched allegiance. Thanks to Dave O’Flynn for the link.
  • China ordered 50 A320s instead of the expected 100.

Searching for Amelia

Like many, we’re fascinated with the search for Amelia Earhart, which has resumed. Here are some articles.



Christian Science Monitor



Missing Bob Crandall

The link to a video of Bob Crandall on the Charlie Rose show speaking to airline industry issues, and the bankruptcy at American Airlines, spurred some comments from our readers. The most interesting comment came from a Doug Stephan, whose comment is reproduced at the end of this post.

When we co-owned Commercial Aviation Report (until recently called Commercial Aviation Online by Flight Global, which became the fourth owner of the company), we resided in Dallas in Bob Crandall’s backyard at American.

Naturally the proximity gave us many Crandall stories. Stephan’s comment spurred us to remember some. We share a few with readers today.

Read more

WN vs AA: A personal story

I am going to depart not only from my usual approach to this blog but also shift from the editorial “we” to a personal “I” for this story. The point of the story is not my personal family issue but an illustrative point about Southwest Airlines and American Airlines.

As readers know, I live in Seattle. I have family in the Chicago area. My family had a developing situation that required that I go to Chicago to deal with it. The plan had been to attend the ISTAT meeting and US Airways media day in Phoenix earlier this week, fly back to Seattle for a day and then on to Chicago Friday. I had booked Southwest for the SEA-PHX-SEA trip and American Airlines for the SEA-ORD-SEA trip.

I truly don’t like flying Southwest because of the boarding process and the lack of an assigned seat. I’m a lifetime Gold Advantage member of American, with all the perks that implies.

I chose WN for the PHX trip because my business partner was joining me and she had to check a bag–and bags fly free on WN. I chose AA for Chicago because of the aforementioned Gold status and perks.

On Tuesday evening–the end of the ISTAT meeting but before the US Airways event–I received a call from my brother indicating the family situation had become critical; I need to fly to Chicago directly from PHX on Wednesday. WN changed the ticket (charging for the fare difference). I called AA to cancel my Friday reservation. The ticket was, as I knew, non-refundable but I also knew I could apply it for a future trip. For the fare difference and, as I also knew (regrettably), a $150 change fee. (Besides which AA also charges for the baggage check, which wasn’t applicable in this case but nonetheless contrasts ith WN’s policy.)

The situation in Chicago has now stablized for now but for the near term, I will buy WN to Chicago for family follow-up for the flexibility of being able to change tickets without a change fee. Tom Horton, take note: a lifetime Gold member is on your rival for now. I might be able to claim mileage to exotic places on AA and oneWorld compared with Lubbock and Little Rock on WN, but this doesn’t matter. Gary Kelly, also take note: good policies in place in these circumstance–even if I still despise your damn open seating.


Boeing, IAM 751 reach labor agreement, settles NLRB case, MAX stays in Seattle

Seattle Times story.

IAM press conference 11am PST. Live video KIROTV.com.

IAM press release.

Boeing press release.

Brothers and Sisters,
In late October, senior executives from Boeing approached us to ask if we could get together to talk about issues that were going to come up in the 2012 contract talks. We agreed to meet with them to hear what they had to say. What resulted was an ongoing dialog and a series of meetings that ended with a proposal by the Company to extend the current contract with some changes in certain areas — but a huge improvement in job security, which was your No. 1 issue in our first survey for the 2012 contract negotiations.
For these meetings, we pulled together our union negotiating teams, who have experience dealing with the various topics the Company wanted to cover: Health and Benefits, Job Security, Pay, Pension and Incentives. Although we had an idea the Company might want to extend the existing contract, we had to wait until they confirmed it in writing that this was their intent.
We did not publicly announce these talks, for reasons we know you understand. In the past, we’ve gone through negotiations with media, politicians and bloggers second-guessing our moves and trying to determine the outcome while we work against a looming deadline. To make a big public splash this time would have undermined what we were doing and would have gone against the reasons why we agreed to meet with the Company in the first place.
We now know this was the right decision. What has resulted is an unprecedented commitment by Boeing to Puget Sound and Portland for the 737MAX and the related manufacturing that’s currently being performed here. This will generate long-lasting security for our members. It also resulted in a Boeing commitment to the success and continuation of the other airplane programs where our members have shown time and again their expertise, productivity and quality, resulting in increased profits for the Company.
Based on many factors – the current economy, the state of affairs at Boeing and our ability to secure unprecedented Job Security for our members — we unanimously recommend you vote to accept this proposed contract extension.
We need to be clear: this proposal does include some sharing in the increases in Health Care costs, with the amount varying, depending on the plan you choose. Negotiations are about give and take and to achieve gains in Job Security, Pension and Wages, we had to be willing to compromise elsewhere. However, in doing so, we were also able to increase benefit levels in dental and vision, and win protections that cap the amount you will be paying, including guarantees that you won’t have to pay any future federal taxes on health-care plans. In the end, we’ll still have health care benefits far superior to those earned by most workers in our industry, and our nation.
On the plus side, there are some significant improvements, which are outlined on these pages. This should be considered as a full package as you discuss this proposal with your family.
If approved, the proposed four-year extension would be in effect upon ratification through September 8, 2016.  Highlights of the offer include the following:
• We were able to secure the future of the 737MAX for Puget Sound, including  current parts manufacturing,
  assembly and supporting shops, such as the Wire Shop & Interior Shop in Everett.
• Continuing a firm commitment to widebody production in Everett.
• Securing a firm commitment to tanker manufacturing for Puget Sound.
• Securing a firm commitment to P-8 manufacturing for Puget Sound.
• Preserved pension for new hires.
• Pension benefit increases each year of $2 up to $91 per month per year of service as of Jan. 1, 2016.
• Boeing VIP savings plan remains intact, along with Company match.
• General wage increases of 2% each year of the contract.
• Quarterly COLA formula remains the same.
• New program intended to pay bonuses from 2 to 4 percent of annual gross pay (including overtime, shift
  differential pay, team leader pay, etc.), based on achieving easy-to-understand safety, quality and productivity
• Preserved retiree medical benefits for all workers, including future hires – something virtually no other group
  at Boeing has done. The same changes that apply to the plans for active employees apply to retiree medical
  (excluding monthly premium language).
• Members will pay more, with the amount of increase depending on the plan you pick. In the end, we will still
  have health care benefits far superior to those earned by most workers in our industry and our nation. Current
  medical plans in all locations continue to be offered.
• Annual out-of-pocket costs are capped.
• New generic drugs and voluntary health screening programs can reduce increased costs in 2013.
• Machinists won’t pay any federal health care “Cadillac taxes.”
• $5,000, to be paid within 30 days of ratification.
Ultimately it is up to you as members to vote whether to accept this contract extension proposal or reject it. Summaries of the proposed contract extension will be available at all Union Halls, and a complete text of the Company’s proposal will be available online (www.iam751.org). We urge you to study them carefully.
Taken as a whole, we think you’ll like what you see. This proposal addresses what you told us was important to you; therefore we recommend you accept it by voting yes.
In Solidarity
Your Union Negotiating Team
Mark A. Blondin
Aerospace Coordinator
Tom Wroblewski
District 751 President/DBR
Robert C. Petroff
Assistant Directing Business Rep W24
Steve Rooney
District 70 President/DBR

Obama proposes $100 per flight fee and Southwest Airlines objects

No kidding. This article speaks for itself.

This is one of the dumbest things to come out of the Administration yet. The airlines are already over-taxed, more so than so-called “sin taxes” levied on tobacco and alcohol. The airlines support a huge segment of the national economy–the travel industry.

This is an astoundingly stupid idea.