Leeham News and Analysis
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Leeham News and Analysis
- Bjorn’s Corner: Air Transport’s route to 2050. Part 19. April 25, 2025
- How good is the C929? Part 2. April 24, 2025
- Boeing First Quarter Results Update: China is 10% of the backlog, with 500 in “Unidentified” April 24, 2025
- Boeing First Quarter Results: Tariffs, Return flights, $10.55bn asset sale April 23, 2025
- RTX Q1 2025 Earnings: GTF Talk Takes A Back Seat To Tariffs April 22, 2025
Boeing strike post mortem: Ortberg has work to do
- Teamsters contract expires in April 2025.
- IAM’s contract with Boeing’s defense unit follows in July.
- SPEEA engineering contract negotiations come up, too.
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By the Leeham News Team
Analysis
Nov. 15, 2024, © Leeham News: Boeing CEO Kelly Ortberg’s performance during the IAM strike is getting low marks from the men and women who will do the work that turns Boeing around-–the mechanics, techs, and engineers in the factories, according to those LNA has spoken with.
Kelly Ortberg, Boeing CEO. Credit: Boeing.
Ortberg came in talking about a “reset” in the company’s relationship with its unionized workforce. He took a good symbolic step by announcing he’d relocate to Seattle and work from there.
But while Wall Street hailed the move, it didn’t land as well as it could have.
Ortberg spent one day in the Renton factory before the strike. Boeing got a good photo of him touring the factory floor, but it’s unclear if he met with many workers.
Likewise, it’s unclear how much Ortberg was involved in one of the biggest crises his new company faced when he took over: the Machinists Union negotiations.
- Ortberg went with Calhoun’s plan
- Boeing bureaucrats believed their own spin
- Behind-the-scenes hardball
- Boeing’s billion-dollar blunder
- Absent Ortberg
- Furloughs and layoffs
- Looking ahead
Production ramp-up goals ambitious; exceed historical trends
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By Karl Sinclair
Nov. 14, 2024, © Leeham News: Airbus (AB) and Boeing (BA), the two largest commercial aircraft makers in the world, have a combined backlog of over $1tr in orders to deliver.
Both OEMs announced plans to increase production rates in the upcoming years to satisfy demand.
Airbus issued guidance for an increase to the A320neo family delivery rate of 75/mo by 2027. It is also targeting a rate of 14/mo on the A220 program by 2026.
Boeing previously projected a return to 50/mo on the 737 MAX family by mid-2025. However, LNA is told that internally, Boeing sees 2028 as a more likely timeframe. The consulting company Accenture thinks it will be five years (ie, 4Q2025) before Boeing achieves rate 50/mo.
Boeing’s 737 production rate was 52/mo on March 9, 2019, the day before the second MAX crash. Regulators worldwide began grounding the MAX on March 10. The Federal Aviation Administration grounded the US-registered MAXes on March 13 for what turned out to be 21 months.
Just how realistic are projections by Airbus and Boeing?
Boeing’s Investment-Grade Rating; Not just for bondholders
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By Karl Sinclair
Nov. 11, 2024, © Leeham News: The Boeing Company (BA) has repeatedly reaffirmed its commitment to retaining an investment-grade rating in comments from management. Many have taken that stance as an attempt to avoid an increase in interest rates on the $57bn in debt Boeing carries on its balance sheet.
However, there is another reason that is broadly overlooked by the market, analysts, observers, and media. Maintaining Boeing’s investment grade rating is important to a good portion of its supply chain that requires Boeing’s financial help.
Buried in Boeing’s filing with the Securities and Exchange Commission is this relatively innocuous paragraph:
“At September 30, 2024, trade payables included $2.7bn payable to suppliers that elected to participate in supply chain financing programs compared with $2.9bn at December 31, 2023. In future quarters, our suppliers’ access to supply chain financing could be curtailed or more expensive if our credit ratings are further downgraded.”
Boeing uses the supply chain to finance operations. Accounts Payable as of September 30, 2024, totaled $12.267bn, while Accrued Liabilities – an expense incurred but not yet paid for, hit $22.628bn (up from $11.964bn and $22.331bn year-end 2023, respectively).
Ortberg taps Mulally, Conner about Boeing’s recovery
By Scott Hamilton
Nov. 8, 2024, © Leeham News: When Kelly Ortberg assumed the chief executive’s slot at the ailing Boeing Co., he knew the company well as an 
outsider.
Ortberg had been CEO of Rockwell Collins, a major supplier to Boeing. After Collins was acquired by United Technologies (now RTX Corp.), he still had the vantage point of supplying Boeing. But he was and is nevertheless an outsider. He’s faced with the herculean task of fixing an American icon that’s descended into the abyss.
Being an outsider has its advantages and disadvantages. He brings fresh eyes and fresh perspective. But Ortberg doesn’t know inside Boeing, its processes, its culture (at least not intimately), or many other important things to fix the company.
Kelly Ortberg. Credit: Boeing.
To help mitigate this, Ortberg has consulted two Boeing “lifers” for background and input: Alan Mulally and Ray Conner. Mulally is a legend at Boeing, revered by many to this day for his engineering prowess and leadership style. His last position was CEO of Boeing Commercial Airplanes. Conner began working for Boeing on the shop floor and worked his way up to become CEO of BCA.
Ortberg knew both men from his supplier days. However, seeking their advice contrasts sharply with his predecessor, who was also tasked with fixing Boeing (and failed). David Calhoun didn’t reach out to these “wise men.” Instead, sources told LNA during his tenure that Calhoun believed he didn’t need and certainly didn’t want outside advice from them.
Supply chain problems weigh on Embraer deliveries
By Leeham News Team
Nov 8, 2024, © Leeham News: Embraer has revised down its expected commercial aircraft deliveries for 2024 to between 70 and 73 aircraft, from 72 and 80, amid what CEO Francisco Gomes Neto called continued “obstacles” in the global supply chain.
In its 3Q24 results released on Friday, the Brazilian plane-maker reported revenues totaling $1.692 billion in the period, up 32% yoy.
Both the Executive Aviation and Defense & Security divisions performed particularly strongly, with 3Q24 revenues of $561.5 million and $219.6 million respectively, with each achieving a 65% yoy growth.
On the commercial side, 3Q24 revenues totaled $473.3 million, 11% higher yoy, though gross margin decreased from 6.5% to 4.3% yoy because of supply chain delays, and the product and customer mix. Supply and Services unit revenues were $425.5 million, 16% higher yoy.
Embraer said its revenue guidance for the year remained unchanged at between $6-6.4 billion, with the adjusted EBIT margin between 9-10% (up from 6.5% and 7.5%).
Speaking to investors to mark the release of the Q324 results, Gomes Neto said “supply chain problems” and “ongoing obstacles” had impacted deliveries on the commercial aircraft side of the business.
Clean Joule nears opening SAF factory in Utah
By Scott Hamilton
Nov. 8, 2024, © Leeham News: The commercial aviation industry thinks Sustainable Aviation Fuel (SAF) is the best alternative energy to pursue to meet the lofty goal of achieving Net Zero carbon emissions by 2050.
Plenty of people are skeptical, both of SAF being the best answer and of achieving the 2050 target date.
But a development company called CleanJoule is betting big on SAF’s future. Within the next few months, it plans to open a major production facility in Utah.
The company’s financial backers include Frontier, Wizz, and Volaris airlines, and their major investor, and Indigo Partners. Lufthansa Airlines and several US government agencies collaborate with Clean Joule.
Mukund Karanjikar
Clean Joule was founded in 2009. Its co-founder and CEO, Mukund Karanjikar, said that much of the last 15 years has been devoted to raising funds for its research and development.
The period has also been about technology de-risking, advancing what is called the technology readiness level (TRL) as you go from concept to demonstrating it in an industrial environment.
“This is where we are,” Karanjikar said in a recent interview with LNA. “We are setting up our first industrial demonstration plant, which will go into production [soon]. The pilot plant has been in production for…almost 18 months.”
Boeing’s 12-Step process to recovery – Part 2
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By Karl Sinclair
Nov. 7, 2024, © Leeham News: As employees from the International Association of Machinists and Aerospace Workers District 751 (IAM 751) begin to report back to work after ending their 53-day strike and accepting the fourth offer from the company, Kelly Ortberg, CEO of the Boeing Company (BA) can now shift his attention to other pressing needs.
LNA identified 12 key points that need to be addressed. We continue analyzing what needs to be addressed in the upcoming months and years to get Boeing back on track.
Related Article
Boeing’s 12-Step process to recovery
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By Karl Sinclair
Nov. 5, 2024, © Leeham News: When Kelly Ortberg became CEO of The Boeing Co. on Aug. 8, the company was mired in a multitude of crises. The most immediate was the open labor contract with its largest union, the International Association of Machinists and Aerospace Workers District 751 (IAM 751). The contract would expire 34 days after Ortberg took over from David Calhoun.
A strike was considered likely, and those thinking so were right. Based on a near-unanimous vote, members rejected the contract on Sept. 12 and walked off the job hours later.
Now, 53 days after the strike began, the union has approved a fourth contract offer. The first employees will begin returning to work tomorrow, and the remaining 33,000 union members must return by Nov. 12.
Boeing can now get back to the task of building aircraft.
Ortberg will now be at peace with the IAM’s touch labor for the next four years and can move on to tackling what needs to be fixed.
On the 3Q2024 earning call, Ortberg alluded to the work ahead. “First, we need a fundamental culture change in the company; second, we must stabilize the business; third, we need to improve our execution discipline on new platform commitments across the company; and fourth, while doing the first three, we must build a new future for Boeing.”
Boeing strike is over; IAM members approve new contract by 59% vote
Nov. 4, 2024, (c) Leeham News: Just in: the International Association of Machinists District 751 members approved a new four year contract with Boeing by a vote of 59% to 41%, ending a nearly two-month strike.
Coverage continues tomorrow.
Airbus looks to larger A220, insists not a threat to A320
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By Leeham News Team
Nov 4, 2024, © Leeham News: Airbus sees potential for an up-gauged A220 aircraft, but that would not pose a threat to the future viability of the A320 family, the company’s SVP for commercial aircraft marketing, Joost Van der Heijden, has said.
A220 sales have been somewhat sluggish, with the larger A220-300 variant leading in orders. In the first nine months of 2024 (to the end of September), Airbus secured an order from Air Baltic for 10 -300s, and cancellations from Nordic Aviation Capital for two of the smallest -100 variant and 10 -300s. In 2023, the A220 secured 142 orders across both variants.
Airbus A220-500. Credit: Leeham News.
Seeking to drive demand in the A220 program, Airbus is understood to be considering a stretched A220-500 model once production reaches 14 units per month, and Van der Heijden acknowledged there was “potential for family growth” beyond the current -100 and -300.
The A220-100 is a 110-seat airplane in a typical two-class configuration. The A220-300 seats 135 passengers, and the A220-500 would seat around 157, putting it in direct competition with the A320neo.