Leeham News and Analysis
There's more to real news than a news release.
HOTR: Investors optimistic for Boeing. Are they too optimistic?
By the Leeham News Team
March 10, 2021, © Leeham News: Boeing’s recovery will be long, slow and painful.
But Boeing has been through long, slow and painful periods before.
Investors appear optimistic. The stock price has been rising since lows hit immediately after and throughout the pandemic.
The stock price is far off its high of $440 on March 1, 2019. March 1 was after the October 2018 Lion Air 737 MAX accident but nine days before the March 10, 2019, Ethiopian Airlines MAX crash. The price closed yesterday at $231, abut equal to where it was a year ago today.
Suppliers remain hunkered down as pandemic recovery may stall
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By Scott Hamilton
Introduction
March 8, 2021, © Leeham News: Aerospace suppliers continue to struggle even as passenger airlines begin to gingerly place new aircraft orders and 
Boeing resumes production of the 737 MAX.
Airbus continues to produce the A320, A330 and A350 at lower production rates than the pre-pandemic era. Boeing is at low-rate production for the 737 MAX, after a 20-month grounding. The 777 is down to 2/mo and the 787 goes to 5/mo this month. At least two aerospace analysts on Wall Street think the 787 rate could come down further.
Airbus and Boeing each received a handful of orders so far this year.
But suppliers continue to struggle.
Summary
- Airbus, Boeing continue to extend payments.
- Smaller suppliers seek bankruptcies.
- Larger suppliers remain in “hunker down” mode.
Pontifications: First flight nears for Berlin Airlift Foundation’s replacement airplane
The left wing of the Berlin Airlift Historical Foundation Douglas C-54E was impaled by a hangar beam during a tornado. Source: BAHF.
By Scott Hamilton
March 8, 2021, © Leeham News: The Berlin Airlift Historical Foundation appears to be weeks away from the test flight for the replacement of the Douglas C-54E that was badly damaged last year in a tornado.
The 76-year old airplane participated in the historic 1948 airlift that brough food, coal and other goods to West Berlin after the Soviet Union initiated a ground blockade. The Soviets tried to starve the West Berliners into submission and force the former World War II Allies (Britain, France and the US) to hand over occupation of West Berlin to the Soviets, who occupied East Berlin deep inside East Germany.
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Bjorn’s Corner: The challenges of hydrogen. Part 27. Fuel cell APU gains
By Bjorn Fehrm
March 5, 2021, ©. Leeham News: We have discussed different auxiliary power generation principles for a hydrogen aircraft over the last weeks. We found a fuel cell auxiliary power system has many attractions, one being the possibility of making an elegant more-electric aircraft system architecture.
With or without such an architecture, the fuel cell alternative will save hydrogen consumption and cost compared to a hydrogen-converted APU alternative. What’s the value of the saving?
Figure 1. The Ballard/Audi FCgen-HPS fuel cell stack for cars and other mobility applications. Source: Ballard Power Systems Inc.
The A350, Part 8 A350-1000 Intro
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By Vincent Valery
Introduction
Mar. 4, 2021, © Leeham News: After assessing the performance of the A350-900 and its ULR variant, we now turn our attention to the largest A350 variant, the -1000. It entered service in 2018, a little more than three years after the -900.
Summary
- Stretching the aircraft by different means than the 777-300ER;
- A change of plan costs a significant order;
- Moderate sales and limited prospects in a changing market;
- An aircraft for trunk routes.
HOTR: Alaska begins service with 737 MAX
- Alaska likely to cancel A320neo order. Details below.
By the Leeham News Team
March 1, 2021, © Leeham News: Alaska Airlines today launched its first service with the 737 MAX.
The carrier’s first flight was flight AS 482 from Seattle to San Diego, operated with a 737-9.
Alaska is the fourth US airline to operate the MAX. It is the third to use it in service since the type was recertified in November by the Federal Aviation Administration. American and United airlines returned their MAXes to service earlier. Southwest Airlines followed later this month. The Seattle-based airline hadn’t taken delivery of the MAX before the March 13, 2019 grounding.
Alaska is the second carrier to place a follow-on order for the MAX, after Ryanair, following recertification by the FAA. The MAX 9 will replace Alaska’s remaining Airbus A319/320ceos by 2024. Alaska continues to operate 10 Airbus A321neos and still has 30 A320neos on order, all from its acquisition of Virgin America in December 2016. In its annual 10K filing, Feb. 26, with the Securities and Exchange Commission, Alaska said, “At this time, we do not expect to take delivery of these 30 Airbus aircraft.” Alaska disclosed that $15m in deposits for the A320neo order, made by Virgin America, are “not likely to be recoverable.”
Alaska Airlines Boeing 737-9. Source: Woody’s Aeroimages.
The carrier originally ordered the 737-8. Officials later swapped these orders for the larger MAX 9. Alaska’s 737-900ERs are configured with 178 seats compared with the 737-800’s 159 seats. The advertised range of the MAX 9 is 3,550 statute miles with one auxiliary fuel tank. The tank adds about 270 miles to the range of the base specification.
Boeing doesn’t break out the sales of the MAX sub-types. There are an estimated 250-300 orders for the MAX 9, a “tweener” airplane between the MAX 8 and MAX 10.
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.