Leeham News and Analysis
There's more to real news than a news release.
Boeing’s Ability to Finance the Next Airliner
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By Vincent Valery
Introduction
March 1, 2021, © Leeham News: The combination of the 737 MAX crisis and the COVID-19 pandemic led Boeing to lose $12.5bn over the 2019-2020 period. Boeing Commercial Aviation (BCA) lost $20.5bn during those two years, compared with a $7.8bn operating profit in 2018. Revenues at the division fell from $60.7bn in 2018 to $16.2bn in 2020.
The severe difficulties at BCA led Boeing to issue record amounts of debt. Net debt (subtracting cash and short-term investments) increased from $5.2bn to $38bn between the end of 2018 and 2020. Boeing issued another $9bn in debt in early February to refinance a portion of this debt.
As the commercial aviation ecosystem recovers from the COVID-19 pandemic, Boeing’s financial situation should improve. However, the OEM will have to deal with the sizable debt load accumulated during the twin 737 MAX and COVID-19 pandemic crisis.
LNA analyzes Boeing’s financial situation, including the OEM’s ability to finance a future aircraft program.
Summary
- A strained balance sheet;
- Two healthy products and a weak one;
- Post COVID-19 recovery prospects for BCA;
- Hard choices to finance a new aircraft program.
Pontifications: Legislature weighs overdue actions for aerospace
March 1, 2021, © Leeham News: Two bills before the Washington State Legislature intend to create long-term strategic plans to grow the state’s advanced manufacturing sector in general – and the space industry in particular.
By Bryan Corliss
To this we say yes, hell yes and amen.
North America’s largest aerospace cluster has lurched from crisis to crisis over the past 20 years, with elected officials scrambling to meet Boeing’s demands for tax, workforce and labor concessions.
And – much to our dismay – for most of the past two decades, leadership in the state Capitol of Olympia has been content to cobble together ad hoc responses with only the faintest lip service toward any kind of long-range strategic planning for future industry needs.
These bills – Substitute House Bill 1170 and Substitute House Bill 1190 – have the potential to change all of that.
- Bills contain a lot of what we’ve long advocated
- Manufacturing bill sets ambitious goals for state
- Space bill seeks to boost – and capture – fast-growing sector
- Taxes aren’t on the table — yet
Read more
Bjorn’s Corner: The challenges of hydrogen. Part 26. Auxiliary power
February 26, 2021, ©. Leeham News: Last week we discussed auxiliary power generation for a hydrogen aircraft and found that a fuel cell system had many attractions.
However, it’s more challenging to develop than a hydrogen-converted APU, and we were asked to work through this case as well.
Figure 1. The principal parts of a single-aisle APU. Source: United Technologies.
The A350, Part 7: The A350-900ULR versus 777-200LR/A340-500
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By Bjorn Fehrm
Introduction
February 25, 2021, © Leeham News: Last week, we started analyzing the long rangers of the Airbus A350, Boeing 777, and Airbus A340 families.
The A340-500 and the 777-200LR are a generation older than the A350-900ULR. We compare their performance on the world’s most challenging route, Singapore to New York, to find out how much Singapore Airlines gains by changing from the A340-500 to the A350-900ULR.
Summary
- The A350-900ULR is unique among the Ultra Long Range aircraft by being a lightly changed variant of the standard A350-900.
- By adopting the A350-1000 tank filling levels, the aircraft has enough fuel to fly up to 20 hours with a long-range payload.
- Should the airline change its mind, the A350-900ULR can convert back to a standard A350-900.
- With modern technology, it outclasses the economics of the 777-200LR and A340-500.
Podcast: 10 Minutes About the Boeing Board of Directors
Feb. 23, 2021, © Leeham News: Last week, Boeing announced that two members of the Board—Arthur Collins and Susan Schwab—will retire at the end of their terms in April. No replacements have been named yet.
Earlier, Ambassador Nikki Haley resigned over policy differences related to the COVID crisis CARES act. Haley was not replaced. More recently Caroline Kennedy resigned from the Board. She was replaced by the former CEO of the accounting firm KMPG.
Boeing’s 12-member Board is heavy on representatives of the defense and finance industries. It has ex- politicians, pharmaceutical and communications members. But other than Lawrence Kellner, who is from the airline industry, there is nobody representing commercial aviation manufacturing, design, engineering or production.
LNA’s podcast today takes a look at these facts and Boeing’s Board of Directors.
Pontifications: For Boeing, the future is a new airplane, not the status quo
By Scott Hamilton
Feb. 22, 2021, © Leeham News: Tunnel-vision pundits, analysts, and even some experts say Boeing shouldn’t launch a new airplane program within the next few years.
Why? They say doing so will cannibalize the 737 MAX 9 and MAX 10. They say it will undermine sales of the entire MAX family.
I say, poppycock.
Boeing has a MAX problem. It’s not the grounding, although the issues from this are obvious. LNA has written about this ad nauseam, but it’s necessary to remind these new airplane-naysayers. The MAX 7 is a sales dud. The MAX 9 isn’t far behind. And the MAX 10 is uncompetitive with the Airbus A321neo family.
The only MAX that has a bright future is the MAX 8. Boeing can’t rely on the MAX 8 for its future in the 125-240 seat sector.
Differentiation in the marketplace and the time for the open rotor
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By the Leeham News Team
Introduction
Feb. 22, 2021, © Leeham News: Airliners are now so efficient, one challenge facing Airbus and Boeing in competing is overcoming the laws of diminishing returns.
The time may finally have come for an Open Rotor airliner. Source: Safran.
LNA described this challenge Feb. 8. Additionally, airport infrastructure erects a vast number of design roadblocks.
We focused on the creation of the 737 replacement and how difficult it will be to make meaningful performance upgrades to the economics of the vehicle. We outlined the next battle in product differentiation most likely will occur in optimizing non-flying time operations, focusing on ground operations as the next efficiency battleground. Since then, it was reported that Boeing indicated that a new aircraft sized between the 737 and the 767/NMA was a front runner in their future planning.
Summary
- NMA Lite needed for 737-9/10 to 787-8 sector.
- Replacement for 737-7 and 737-8 best suited for Open Rotor design.
- What an Open Rotor plane might look like
Bjorn’s Corner: The challenges of hydrogen. Part 25. Auxiliary power
By Bjorn Fehrm
February 19, 2021, ©. Leeham News: Last week we discussed hydrogen aircraft propulsion and found a shaft power producing gas turbine was considerably more weight-efficient than a fuel cell powering an electric motor. Both had the same 55% shaft power efficiency.
Will a gas turbine APU burning H2 be the best choice for auxiliary power as well?
Figure 1. The Honeywell 131-9 APU for the Airbus A320. Source: Honeywell.
Airbus 2020, prudent navigation of a challenging environment
February 18, 2021, © Leeham News: Airbus presented its results for 2020 today. The company reported a net loss of €0.5bn at revenues of €50bn (€70.5bn 2019). Airbus’ operations delivered a result of +€1.7bn; it was then reduced to a loss by charges of €2.2bn for the year.
Airliner deliveries reduced by 34% to 566 for the year (863), with net orders at 268 aircraft (768). A forecast for 2021 was given as same-level deliveries with operating profit at +€2bn and break-even Free Cash Flow.
The A350, Part 6 A350-900ULR Intro
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By Vincent Valery
Introduction
Feb. 18, 2021, © Leeham News: After comparing the Airbus A350-900 and the Boeing 777-200ER on a long haul route, we turn our attention to the A350-900 Ultra Long Range variant.
Summary
- A history of Ultra Long Haul Flights;
- Proliferation along with globalization;
- Poor sales record of ULR variants;
- The attractiveness of the A350-900ULR.