Leeham News and Analysis
There's more to real news than a news release.
Analysts align in reaction to MAX production suspension
Dec. 17, 2019, © Leeham News: Wall Street analysts were fairly aligned in their reaction to Boeing’s decision to suspend production.
Below are excerpt of some of the research notes received by LNA:
Boeing halts 737 production
Dec. 16, 2016: Boeing said it is suspending 737 MAX production.
Here is the full press release.
Are AirAsia and AirAsia X outgrowing their key markets?
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By Judson Rollins
Introduction
Dec. 16, 2019, © Leeham News: AirAsia and long-haul sister AirAsia X have been growing at world-leading rates for much of the past two decades. AirAsia’s fleet growth in the 2000s was so rapid that it quickly became a top customer of Airbus’s A320 program; the airline is now second only to India’s IndiGo as an A320neo customer.
However, neither of the airlines nor their joint venture partners across Asia are producing solid financial returns–making it questionable whether they can economically fly all the aircraft they have on order.
Summary
- Mediocre financial results after lease expenses;
- Debt loads are above industry average, especially at AirAsia X;
- One of the world’s largest order books, especially for A320neos;
- Key bases in countries where capacity growth outstrips local economic trends.
Boeing hiring for key mechanic roles even as production cuts rumored
By BRYAN CORLISS
Dec. 16, 2019, © Leeham News — Even as Boeing’s board of directors met this weekend to discuss a potential 737 MAX production reduction or freeze, the company has continued to hire workers it will need desperately once it finally gets the go-ahead to resume deliveries of the grounded jet.
So far this month, Boeing hired more than 250 new mechanics at its Puget Sound plants. Insiders also tell LNA managers are talking to their recent retirees–among others- about coming back to work.
This is extremely unusual for Boeing. Historically, hiring at the company all but dries up after Thanksgiving, largely because of a provision in its contract with its union touch-labor workers that makes December a lucrative month to be a Machinist–but an expensive month for Boeing.
Two factors could be driving the hiring: a need to quickly install mandated updates on nearly 800 grounded MAXes once the grounding is lifted, and a long-term global shortage of exactly the kinds of workers who have the necessary skills to do those jobs.
- No end in sight for MAX grounding;
- December hiring unusual at Boeing;
- Boeing may need to lock down certain mechanics now;
- Last 777X bonus.
Pontifications: MAX RTS, Emirates 777X order, Suspending 737 production, more
By Scott Hamilton
Editor’s Note: News reports Sunday indicated Boeing is considering reducing or suspending production of the 737 MAX. LNA reported this possibility Dec. 11.
While Sunday’s reports suggest Boeing will halt production, LNA is told a rate cut to between 10-20 airplanes a month is also possible in order to minimize impact to the supply chain.
Dec. 16, 2019, © Leeham News: It’s time for catching up on a variety of topics.
Topics this week:
- 737 MAX Return to Service.
- Emirates Airline 777X order reduction.
- Suspending or reducing 737 production—it’s not the first time.
- E175-E2 first flight.
- Airbus wins Project Sunrise.
Bjorn’s Corner: Why e in ePlane shall stand for environment. Part 1. Hype versus reality.
December 13, 2019, ©. Leeham News: The first all-electric commercial aircraft, a Harbor Air DHC-2 Beaver, flew over the Fraser River near Vancouver in the week (Figure 1). It was powered by a magniX electric engine fed with energy from batteries.
Despite this progress, this Corner series is about why the e in our future ePlanes should stand for environment and not electric.
Figure 1. Harbour Air seaplane flying with a magniX electric engine feed by batteries. Source: magniX.
Norwegian’s attempt to survive
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By Vincent Valery
Introduction
Dec. 12, 2019, © Leeham News: Norwegian Air Shuttle (NAS), struggling to survive after years of over-expansion, took major steps over the last few weeks to overhaul its finances and strategy.
Major strategic shifts included the sale of the Argentinian subsidiary, the end of trans-Atlantic narrowbody operations, and exit out of long-haul markets in two Scandinavian capitals.
The airline appointed Jacob Shram, a former McKinsey consultant and Statoil executive, as a new CEO. Former JetBlue Chief Commercial Officer Marty St. George is also joining the airline on an interim basis.
After years of breakneck expansion, the airline vowed a shift in focus on profitability and business efficiency. In this article, LNA analyzes the various announcements and assesses whether NAS has a chance to survive in the long term.
Summary
- (Finally) cutting the losses;
- No stones left unturned to raise cash;
- Drastically altered fleet plans;
- Chances of working out.
With no end of MAX grounding in sight, Boeing may be forced to cut or suspend production soon
Dec. 11, 2019, © Leeham News: With confirmation by the Federal Aviation Administration that recertification of the 737 MAX won’t happen until 2020, Boeing is rapidly facing a decision whether to reduce or suspend MAX production.
With no end in sight, Boeing can’t continue production of the MAX at the rate of 42/mo much longer.
Through Dec. 6, there were just under 400 MAXes that have been produced. Another 381 MAXes were in service when global regulators grounded the fleet March 11-13.
FAA: No MAX certification until 2020; analysis forecast 15 more crashes if MCAS not fixed
Dec. 11, 2019, © Leeham News: A new round of Congressional Hearings about the Boeing 737 MAX got underway today.
FAA Administrator Stephen Dickson, testifying today before the US House Transportation Committee in a hearing about the Boeing 737 MAX.
Before the hearing began at the House Transportation Committee, FAA Administrator Steve Dickson appeared on CNBC today. Among his statements: recertification of the MAX will slip to 2020, confirming what had become apparent for some time.
“Like I said there are a number of processes, milestones, that have to be completed,” Dickson said in an interview on “Squawk Box.” “If you just do the math, it’s going to extend into 2020,” he told CNBC.
- Transcript of CNBC interview: CNBC Dickson transcript 121119
First reports from Boeing’s MAX briefings last week
Dec. 10, 2019, © Leeham News: The first reporting from last week’s Boeing briefings for analysts, opinion-makers, influencers and consultants (but not the media) began to emerge Saturday. (Media briefings may be scheduled in January.)
The briefings are the latest in Boeing’s effort to restore confidence in the 737 MAX.