Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing wants to remarket China’s airplanes. It’s costly and time consuming. April 28, 2025
- 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
Union scourge Frank Lorenzo at last tells his story in “Flying for Peanuts”
By Scott Hamilton
Sept. 10, 2024, © Leeham News: Thursday is the day the touch-labor union at Boeing, the IAM 751, will vote on a new contract. The militant union is loaded for bear. Members are voting on a new contract for the first time in more than a decade, and the first entirely refreshed contract in nearly two decades.
They want big raises, saying theirs have stagnated since the 2008 contract and two subsequent revisions in 2011 and 2014. The IAM wants a 40% wage hike over a three-year contract. Recapture of benefits concessions also are being sought. A guarantee that the next Boeing airplane will be built in Puget Sound, a seat on the Board of Directors, and a role in fixing Boeing’s safety culture are all on the table.
The IAM 751 advised its members to start saving for a strike fund as far back as 2019. Training has been underway for weeks for picketing. Members held a rally with 25,000 attendees; 99% voted in favor of a strike if an acceptable contract wasn’t reached.
Frank Lorenzo, left, and Donald Trump, during the former’s courtship to entice Trump to buy the famed Eastern Shuttle. Source: Frank Lorenzo.
Against this backdrop, it is somehow fitting that the memoirs of one of labor’s most reviled enemies comes out today: Frank Lorenzo’s Flying With Peanuts is now available via Amazon, Barnes and Noble, and elsewhere. Subtitled Tough Deals, Steep Bargains and Revolution in the Skies, Lorenzo for the first time details his life and his career from his immigrant Spanish parents through the highly controversial career owning Texas International Airlines, Continental Airlines, Eastern Airlines, and purchasing the original Frontier Airlines, PeoplExpress and several commuter carriers; and launching non-union New York Air in one of America’s most unionized cities.
Slow production ramp up, international sanctions slow C919 progress
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By Karl Sinclair
Sept. 9, 2024, © Leeham News: China isn’t getting into the commercial aviation industry to let Airbus and Boeing supply three quarters of the market, says a consultant. The long-term outlook for the Big Two aircraft producers may be considerably more bearish than many think.
He made the following comments when asked about the new Boeing (BA) projections for the aircraft market in China, “COMAC wants to hit 150 (deliveries) in the next five years. That means that one-fourth of that China demand goes to COMAC,” said Brian Langenberg, principal and industrial strategist of Langenberg and Co. “If you believe that China got into the commercial aviation industry to let Boeing and Airbus make three-fourths of their narrow bodies aircraft,” he says people underestimate the determination of the Chinese government.
COMAC C919. Source: Leeham News.
The C919 is COMAC’s latest narrow-body jet, which began commercial service at China Eastern Airlines (CEA) in 2023. Since then, eight more have been delivered to CEA, Air China, and China Southern as COMAC slowly ramps up production. COMAC has more than 1,000 orders for the type, with the vast majority coming from airlines and lessors in China, although AerCap of Ireland has orders for 20.
COMAC’s production goals are aggressive. LNA believes the learning curve will take longer than production managers suggest. International certification by European and US regulators is also important to China and mandatory for export sales.
Related Article
China still needs Boeing to fill demand
Boeing, IAM reach tentative agreement on new contract
By Scott Hamilton
- IAM 751 and Boeing reach a four year contract agreement. The IAM summary is here.
- Additional contract news from the IAM is here.
- The Boeing fact sheet is here: Boeing fact sheet IAM 751 W24 TA highlights-090824a
Boeing CEO Kelly Ortberg. Photo source: Boeing. The new contract agreement between Boeing and the IAM 751 avoids a strike and potentially marks a new era of labor relations between the two.
Sept. 8, 2024, © Leeham News: In a development that is contrary to all expectations, The Boeing Co. and the IAM 751 labor union reached a tentative agreement this morning on a new four-year contract.
IAM members, who assemble Boeing’s airplanes in the great Seattle area, get a 25% raise over the life of the contract; the union asked for 40%. The value goes up to 33% in “wage growth” when the wage increases, and “progression” are calculated. Certain pay grades did get a 42.3% increase, the IAM said.
There is a lump sum payment of $3,000 and Boeing’s 401(k) contribution increases up to $4,160 per employee per year. The union asked for a return to a defined benefit plan, which was probably a non-starter. Lower costs for medical care were agreed.
Boeing committed to build the next new airplane in the Seattle area. A Boeing spokesperson did not have details whether this would be in Renton, where 737s are built, or Everett, where widebody aircraft are currently assembled. Boeing also committed to keep the current 737, 767 and 777X production in Puget Sound.
The union also wanted a seat on the Boeing Board of Directors. Neither side referred to the seat in their information released today, so it appears this may not have been agreed. The Boeing spokesperson had no information on this and the IAM wasn’t immediately available to comment.
The IAM leadership unanimously recommends approval of the contract. The vote is set for this Thursday.
Bjorn’s Corner: New engine development. Part 23. Development risks.
By Bjorn Fehrm
September 30, 2024, ©. Leeham News: We do an article series about engine development and why it has longer timelines than airframe development. It also carries larger risks of product maturity problems when it enters service than the airframe of an airliner.
We have covered the parts of an engine that involve challenging technology and which decide its reliability (dispatch consistency) and durability (time on wing). Now, we discuss why modern engine design is more challenging regarding these parameters than airframe design.
Figure 1. The Pratt & Whitney GTF in cross-section, one of the new engines. Source: Pratt & Whitney.
If a strike occurs, here’s what Boeing can do
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- Contingency plan for 4-12 week strike.
By the Leeham News Team
Analysis
Sept. 5, 2024, © Leeham News: There seems to be quite an expectation that there will be a strike by Boeing’s touch labor union, the IAM walkout at Boeing this contract cycle. The costs associated with a strike are well understood. Crippled cash flow, upset customers, and stock price losses not counting the damage to the companies in Puget Sound that built much of their business models on Boeing worker’s paychecks. It’s never a good thing to sustain a strike of any duration because the disruptive effects can last for years.
The last time the IAM struck was in 2008, for 57 days. The strike cost Boeing billions of dollars in lost revenue, much of which was made up in the following years. The ill-will generated by the strike affected customers. Management-labor relations remain strained to this day. Union leadership is determined to recover previous givebacks in wages and benefits. They want a seat on the Board of Directors, a role in improving Boeing’s safety culture, and a guarantee that the next airplane will be assembled in Puget Sound.
Talks remain far apart, according to the union. Boeing says progress is being made. A strike seems likely at this stage.
Boeing is clear about a strike potential. In a message last week to employees, Boeing said:
Does Boeing want a strike so it can stabilize production or allow time for the supply chain to recover?
Absolutely not. Any work stoppage, whether days, weeks or months, would disrupt our production system, supply chain and most importantly, our customers. When Boeing cannot deliver airplanes as scheduled, customers question our reliability. A strike would only help the competition and hurt our suppliers.
What is Boeing supposed to do if the IAM walks out? The usual answer is sweeping and cleaning and trying to deliver whatever you can sneak out the door to keep the money coming in. It is never a very effective way to operate.
Here are some points to ponder if the strike occurs and Boeing production shuts down.
China banks on C919, but numbers say it still needs Boeing
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By Scott Hamilton
Sept. 2, 2024, © Leeham News: Airbus and Boeing see China doubling its airliner fleet over the next 20 years. The numbers vary between the two companies. But the underlying data points to how challenging it will be for China to meet this demand without letting Boeing back into the mix.
Boeing has largely been frozen out of China since 2017 when then-President Donald Trump initiated a trade war with one of the world’s largest economies. Then, Boeing’s self-inflicted wounds came in the form of the 21-month grounding of the 737 MAX, a 20-month suspension of deliveries of the 787, and major, slow rework required for each model.
On top of this, after Russia invaded Ukraine, the Biden Administration—which kept Trump’s tariffs upon taking office in 2021—ramped up the pressure on China, which initially covertly supported Russia’s war on Ukraine. This support became more open as the war dragged on.
Few Boeing airplanes have been delivered to China since 2017 and fewer orders have been placed.
Boeing predicts that China will need 6,720 single-aisle aircraft through 2043. Airbus sees a need for 7,950 single aisles for the same period. On the widebody side, Boeing forecasts a requirement for 1,575 aircraft; Airbus forecasts a need for 1,380. Widebody freighter forecasts for China are 170 and 190 by Boeing and Airbus, respectively.
Let’s compare these numbers with production rates. China still needs Boeing.
Bjorn’s Corner: New engine development. Part 22. High Turbine technologies.
By Bjorn Fehrm
August 30, 2024, ©. Leeham News: We do an article series about engine development and why it has longer timelines than airframe development. It also carries larger risks of product maturity problems when it enters service than the airframe of an airliner.
We reached the turbine part on our way through the engine, where we last looked at high-pressure turbine temperatures. It’s the most stressed part of the engine and, in most cases, decides its durability. To understand why, we look closer at turbine technologies.
Figure 1. Our example engine, the LEAP-1A, is in cross-section with booster to compressor bleed valve area marked with a red circle. Source: CFM.
The A330 for medium haul or twice the frequency with A321XLR? Part 1
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By Bjorn Fehrm
August 29, 2024, © Leeham News: We have compared the Airbus A321XLR to the Boeing 757 to see if it can replace the long-range single aisle on its trans-Atlantic routes. The result was convincing: The A321XLR is, in many respects, what the Boeing NMA should have been: a replacement for the 757 with additional range.
Now, we look at the short- to medium-range market and check whether a route that was previously only possible with the Airbus A330 can be flown with a fleet of A321XLRs. The advantage, at an equal per-passenger cost, is the doubling of the frequency to drive market growth, revenue, and margin.
Summary:
- The A321XLR is close to 50% of the passenger capacity of the A330-300/900 in a long-range configuration.
- It has most of the range of the A330-300 and can fly the bulk of the routes of an A330-900.
- Can an airline operate a dual daily A321XLR to a daily A330 at the same per-passenger cost?
Using stock could be one option for IAM salary demands
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By The Leeham News Team
Aug. 26, 2024, © Leeham News: Boeing’s in contract negotiations with its touch labor union, the International Association of Machinists District 751 (IAM 751). The powerful union wants a 40% raise over the life of a four-year contract. Leadership wants to recover medical co-pays and reinstate a defined pension plan, given up in previous contracts.
The union also wants a guarantee that the Next Boeing Airplane (NBA) will be built in the Seattle area. Boeing’s executives used the threats of relocating 737 MAX and 777X assembly elsewhere to wring economic concessions out of 751 members in previous contract talks.
The contract expires on September 12. The union membership already has voted to authorize a strike on September 12 if the contract offer is voted down.
This time, the membership believes it is in a stronger bargaining position. Boeing’s weak financial position is viewed as playing right into labor’s strength. Jon Holden, president of the union, echoed those sentiments. “We understand our power. We are ready to use it,” Holden told The Seattle Times. Holden was also not going to let management off the hook, due to the poor financial position Boeing finds itself in, he told the newspaper. “It’s not about whether they can afford to pay us. That’s not even a question,” he added. “They can.”
But the ultimate question is, How can Boeing afford to pay what the union wants?
Here’s how.
Bjorn’s Corner: New engine development. Part 21. The High Turbine.
August 23, 2024, ©. Leeham News: We do an article series about engine development and why it has longer timelines than airframe development. It also carries larger risks of product maturity problems when it enters service than the airframe. We discuss why.
In our journey through an engine, we have reached the turbine part, where we will dig deeper into the high-pressure turbine. This is the most stressed part of the engine and has a major influence on engine performance and durability.
Figure 1. Our example engine, the LEAP-1A cross-section with the high-pressure turbine marked. Source: CFM.