Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Engine makers tout “Plan A” but have “Plan B” backups in R&D June 23, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 27. June 20, 2025
- Pontifications: A Personal Note June 19, 2025
- Airbus books 142 firm orders as Boeing retracts from the Paris Air Show June 19, 2025
- AIN Media Group Agrees to Acquire Leeham News & Analysis June 17, 2025
Embraer goal: $10bn in revenues by 2030, nearly doubling YE2023
Subscription Required
By Scott Hamilton
Nov. 21, 2024, © Leeham News: Only a few years ago, Embraer was struggling. Airbus acquired Bombardier’s C Series program for US$1 and rebranded it the A220. Instead of competing against a financially distressed Bombardier with its E2 jets, Embraer faced the global might of Airbus.
In a defensive move, Embraer agreed to create a joint venture with Boeing as the junior partner, with a mere 20% share of the JV.
Francisco Gomes Neto, President and CEO of Embraer. Credit: Embraer.
Sales of the E2 stalled while the market awaited Boeing’s takeover of Embraer’s commercial unit. All regulatory authorities quickly approved the JV except the European Union, which stalled interminably. Embraer believes Airbus was behind the stall, and it may have been. The USA’s new President, Donald Trump, imposed a 20% tariff on Airbuses delivered to the US, and the EU was in a retaliatory mood.
Then Boeing’s global 737 MAX fleet was grounded beginning on March 10, 2019, after two fatal crashes revealed a design flaw of a flight control system. A year later, the COVID-19 global pandemic began. Sales and deliveries from all manufacturers, including Embraer, immediately tanked.
A month later, Boeing withdrew from the JV. Embraer cried foul and this year won a $150m arbitration break-up fee claim.
Today, it’s clear Embraer’s operational and financial performances have recovered from these difficult years. The stock price is up 147%. Deliveries of the E-Jets are nearing pre-pandemic, pre-JV levels. The defense, executive jet, and services divisions are on upward swings. And now, Embraer’s goal is to hit $10bn in revenues by 2030, almost double what it reported for the full year of 2023.
Executives outlined the company’s progress and ambitions at an investors’ day conference in New York on Monday. This is the first in a series of reports from this event.
Spirit Airlines bankruptcy could free up scores of A320/321s
Subscription Required
By Scott Hamilton
Nov. 18, 2024, © Leeham News: Spirit Airlines’ bankruptcy will likely be its death knell unless a deep-pocketed savior emerges. The carrier filed a pre-packaged bankruptcy petition today, expecting to emerge in the 1Q2025. Uncertainties follow any Chapter 11 filing, however, and there is no guarantee Spirit will successfully reorganize.
Spirit Airlines A320neo. Credit: Spirit Airlines.
However, a fairly large order book for the A320neo and A321neo could help lessors that hold a large portion of these orders remarket the aircraft to viable airlines.
Spirit, an Ultra-Low-Cost Carrier (ULCC), has nearly 100 neos on order. Thirty-three are for the A320neo, and 65 are for the A321neo. All but six have delivery dates from 2026 onward, well before production begins. Airbus can deliver these aircraft to a new buyer’s specifications. Monument positions (lavs and galleys, for example) don’t have to be relocated, and interiors may be configured as a new buyer desires.
The biggest challenge will be whether interior companies can accommodate new Buyer Furnished Equipment (BFE) near-term. Safran, Collins and others are running late on some interiors as it is.
This chart shows the delivery stream for Spirit’s aircraft, as based on data from Cirium last month.
CAE: Leading quietly from Canada, with changes
Subscription Required
By Karl Sinclair
Nov. 18, 2024, © Leeham News: Marc Parent, the CEO of the simulator company CAE of Canada, will step down next year after 15 years at the helm, the company announced on Nov. 12.
Parent, 63, will retire at the Annual General Meeting in August 2025, after 20 years at the company. He joined CAE after working at Bombardier as an aerospace engineer, working his way up to vice-president and general manager of the Challenger 300, Challenger 604, 850/870, and CRJ-200 aircraft programs.
CAE is the dominant simulator company, providing equipment to the military, corporate and commercial aviation industries.
CAE grew under his leadership to become industry leader in the industry, growing revenues to C$4.3bn and a C$12bn backlog in 2024.
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.
Subscription Required
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
Subscription Required
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
Subscription Required
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
Subscription Required
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