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 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
Bjorn’s Corner: Air Transport’s route to 2050. Part 3
By Bjorn Fehrm
November 1, 2024, ©. Leeham News: We do a Corner series about the state of developments to replace or improve hydrocarbon propulsion concepts for Air Transport. We will find that development has been very slow.
Last week, we listed the different projects that have come as far as flying a functional model or prototype, as we need this filter to reduce the hundreds of projects that have declared they want to develop such an aircraft type. We can see that we have only a certified two-seat trainer, and one project has a prototype that has started certification, the CX300 six-seater in Figure 1.
Why is the progress so slow?
Figure 1. The Alia CX300 six-seater started certification in 2023. Source: Beta Technologies.
Five years to produce 737s at 50/mo, consultancy predicts
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By Scott Hamilton
Oct. 31, 2024, © Leeham News: When Boeing held its first investors day since 2018 in November 2022, then-CEO David Calhoun projected that the production rate for the 737 would be 50/mo sometime next year, three years hence.
John Schmidt, Accenture. Credit: Accenture.
This rate was slightly below the 52/mo production on March 9, 2019. The next day, an Ethiopian Airlines 737 MAX 8 crashed on take-off from Addis Ababa. It was the second MAX crash in five months. The two disasters killed 346 people. China grounded more than 80 MAXes operated by its airlines the same day. Europe’s EASA regulator and Transport Canada followed shortly. The Federal Aviation Administration didn’t follow suit until March 13.
Twenty-one months later, the FAA recertified the MAX. Global regulators followed, with China’s CAAC being the last to do so.
In March 2019, Boeing planned on boosting production to 57 a month by the end of the year. Planning was underway to increase production to 63/mo and even into the 70s.
Calhoun’s guidance blew out the window when a door plug blew out of a 737-9 MAX at 16,000 ft on Jan. 5 this year. But for the grace of God, there were no fatalities and only minor injuries. Pilots made a safe emergency landing. The ensuing investigation revealed production and safety lapses. The FAA clamped down on Boeing, officially capping production at 38/mo for now. In reality, new production hovered around 20/mo before the assemblers, the IAM 751 union, went on strike on Sept. 13. There is no end in sight.
Boeing’s new production 737 line has been well below the target of 38/mo all year. Source: Bernstein Research, Oct. 29, 2024.
So, when will Boeing get to a rate of 50/mo? A consulting firm—which occasionally consults with Boeing—predicts it will be another five years. Around November 2029. It’s a stunning prediction.
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€).
Job one in Boeing’s employee reset: changing the culture
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By Scott Hamilton
Oct. 28, 2024, © Leeham News: With last week’s decisive rejection by Boeing’s largest union, the IAM 751, of the third contract offer from the company, the question remains: What now?
Obviously, Boeing and the union must return to the bargaining table. A fourth contract offer must be forthcoming. One reason the union members voted 64%-36% to reject the third offer: no pension plan was included, a do-or-die demand for many members.
Boeing must sweeten its contract offer to the IAM 751–a lot–to settle the strike. Credit: Leeham News.
Boeing won’t give in on this, officials say. So, what now?
John Schmidt. Credit: Accenture.
It’s clear Boeing must sweeten the terms contained in the third contract offer. The 35% pay hike still fell short of labor’s demand for a 40% hike. Boeing also sweetened the bonus and 401(k) retirement plan contributions, and other terms. It’s also pretty clear that Boeing needs to really, really sweeten the offer to persuade the do-or-diers to let go of the pension plan demand.
How much sweetening is needed is anybody’s guess. But eventually some agreement will be reached and passed.
Then the story becomes about recovery.
In an interview with Accenture, a consultancy the works closely with aerospace companies (including Boeing), is optimistic that Boeing’s new CEO can turn things around. John Schmidt, the head of its Global Aerospace and Defense department, explained in an interview last week after the contract vote.
Bjorn’s Corner: Air Transport’s route to 2050. Part 2.
October 24, 2024, ©. Leeham News: We do a Corner series about the state of developments to replace or improve hydrocarbon propulsion concepts for Air Transport. We will find that development has been very slow.
We don’t have, and will not have, a certified and produced aircraft that can transport passengers using anything but classical propulsion concepts this side of 2028 and probably 2030 if we put the bar above five passengers.
This is 14 years after the flight of the Airbus E-Fan in 2014, which started a multitude of studies and projects to explore new, more environmentally friendly ways to propel aircraft.
Figure 1. The Airbus E-fan flying at the 2014 Farnborough Air Show. Source: Wikipedia.
Why is the progress so slow? Normal aircraft development takes seven to a maximum of nine years?
‘Tailwinds’ push MTU Aero Engines to hit earnings target early after solid Q3
By Leeham News Team
Oct 24, 2024, © Leeham News: MTU Aero Engines reported solid financial performance for the third quarter, with the German manufacturer confirming it would achieve its earnings target of €1 billion ($1.08 billion) a year early thanks to strong results across its military and commercial divisions.
The company’s adjusted revenue increased by 14%, rising from €4.6 billion as of September 2023 to €5.3 billion in 2024.
Adjusted operating profit to September rose by 25% to €744 million, versus €597 million in the first nine months of 2023, while adjusted EBIT for the quarter rose by 42% to €273 million, versus €192 million in Q3 2023.
The adjusted EBIT margin increased from 12.8% to 14.0% and adjusted net income to September rose to €541 million, an increase of 23% from €438 million. The results, announced on Thursday, beat market expectations, and shares were trading up by around 1%.
Speaking to investors, CEO Lars Wagner said “current tailwinds” were offering MTU “significant growth opportunities”, with robust demand across the OEM, spare parts and maintenance businesses driving this.
Wagner said MTU was also benefiting from improvements within the supply chain. “Am I happy? Not yet, but some of the parts have recovered earlier than expected. I see a good trend here so in general the supply chain is improving,” he said. Read more
Heart Aerospace’s revised ES-30, Part 3. UPDATED
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By Bjorn Fehrm
October 24, 2024, © Leeham News: We analyze Heart Aerospace’s latest evolution of the hybrid ES-30. The latest version, presented in spring 2024, is a parallel hybrid, putting gas turbine turboprop engines outside the electric motor engines.
After examining what such a parallel hybrid system means for aircraft dimensions and masses, we now fly the aircraft on a typical US short-haul route through our Aircraft Performance and Cost Model (APCM) to assess its operational performance.
Does the ES-30 make operational sense for an airline that needs a short-haul feeder?
Summary:
- The parallel hybrid architecture gives the ES-30 certain operational flexibility to fly routes over 100nm, making it possible to replace present 30 seaters on such short routes.
- However, the operational costs are considerably higher than today’s 30-seaters. As always, the problem is the battery costs.
- UPDATE: Heart Aerospace contacted us after the article was published. The article has been complemented with their information.
It’s a game of chicken now, and Boeing has up to 55bn eggs
By Scott Hamilton
Oct. 23, 2024, © Leeham News: In the end, it wasn’t even close.
Sixty-four percent of the IAM 751 members voting tonight rejected last Saturday’s revised contract offer from The Boeing Co. The absence of restoring the Defined Benefit Pension plan that was given up in 2014 and inadequate increases in wages are cited as the key issues.
There was already a game of chicken underway between Boeing and the union. This time, Boeing was considered to hold the weaker hand.
But moves within the last two weeks to improve its liquidity position dramatically changed Boeing’s ability to withstand a long strike.
Boeing filed a registration statement on Oct. 15 for a “shelf offering” of equity or other securities for up to $25bn. On the same day, it added a second line of credit for $10bn to be drawn when needed. A previous $10bn LOC remains untapped. And it had $10bn in cash and securities on Sept. 30, the end of the third quarter.
Boeing has $55bn in liquidity to carry it through a long strike, if necessary—far more than the IAM has today.
Boeing is adamant that it will not restore the Defined Pension Plan. The 35% wage increase proposed in the now-rejected offer only catches members up to 2014 and not today’s wage requirements, said one observer.
Boeing confirms previously announced loss, charges for 3Q; CEO pledges fixes (Updated with Earnings Call) (Update 2)
Boeing CEO Kelly Ortberg. Credit: Boeing.
Update 2: IAM 751 members vote 64% to reject the contract offer. The strike continues, no end in sight now. (via Dominic Gates of the Seattle Times.)
By Chris Sloan
Oct. 23, 2024, © Leeham News: Boeing this morning confirmed its previously announced 3Q2024 loss and charges, while CEO Kelly Ortberg vowed to fix what’s wrong at the company.
- Previously announced multi-billion dollar loss and billions in charges.
- Today’s final financial reporting
- CEO’s prepared statement
- Financial presentation
At a crossroads
On the earnings call, Ortberg candidly assessed Boeing’s current state.
“Clearly, we are at a crossroads. The trust in our company has eroded. We’re saddled with too much debt. We’ve had serious lapses in our performance across the company, which has disappointed many of our customers,” a contrite Ortberg said, presiding over his first earnings call since joining the company in August – already what seems a lifetime ago.
With Boeing’s 33,000 machinists voting today on whether to accept the company’s latest contract offer and end the devastating six-week strike, the company reporting disastrous losses of nearly $6bn and a negative 32% operating margin. With questions circling about its liquidity, the stakes couldn’t be higher for a company worth .5% of the entire United States GDP deemed “too big to fail.”
Boeing’s short- and long-term future is at the mercy of IAM District 751. Voting continues to 5pm PDT; results are expected around 9pm PDT. Most observers rate the outcome of acceptance or rejection a toss-up.
The OEM posted revenues of $17.8bn (down 1% compared to 3Q23) with a GAAP loss of ($9.97) per share. Total revenues in the Commercial Airplanes segment fell 5% to $7.44bn. The company reported a staggering $4bn loss in the commercial segment due to a ~$3bn charge attributed to the latest 777X delivery delay to 2026, 767 program termination by 2027, and most significantly the impact of the labor action. Boeing has amassed $47bn in net debt by the end of the third quarter.
GE Posts Mixed Q3 Earnings: Strong Earnings with LEAP Shipset Declines and Further 777-X Delays
By Chris Sloan
October 27, 2024, © Leeham News: GE completed its second quarter as a pure play aerospace play, announcing Q3 2024 earnings with positive revenue, profit, sales growth, and services coupled with headwinds from overall reduced engine deliveries of 4%, impacts to the GE-9X program from the Boeing 777-X’s latest delays, and the all too familiar supply chain constraints. Growth in services and pricing power provided a boost.
“Our recent wins and wide bodies and narrow bodies built on our considerable backlog of $149bn,” said GE Aerospace Chairman and CEO Larry Culp. Recent commercial campaign wins include narrowbody orders from lessor Avolon, which ordered 150 LEAP-1A engines to power 75 A320/321neos and announced widebody commitments from EVA Air for four GEnx-powered 787s and Qatar’s order for 40 GE9X engines to power 20 777s. The propulsion provider, however, is guiding towards a 10% decline in commercial engine deliveries year-on-year. Markets punished GE with an 8.5% drop in its stock price by mid-morning trading.