Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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Pontifications: Southwest to evaluate splitting airplane supplier next year
Oct. 28, 2019, © Leeham News: Gary Kelly, the chairman of Southwest Airlines, told CNBC Thursday that next year, the company will review whether to source airplanes from another manufacturer besides Boeing.
This, of course, means Airbus.
The prolonged grounding of the Boeing 737 MAX is the reason. Southwest says the grounding already has cost nearly $500m in lost revenues.
Kelly said the analysis won’t be for “smaller” airplanes, but he didn’t specify to CNBC what this means.
Southwest has 500 Boeing 737-700s seating 143 passengers at 30-31 inch pitch.
The Airbus A220-300 seats 145 at 32 inches in the Air Baltic one-class configuration.
The Embraer E195-E2 seats 146 passengers, but in a 28-inch pitch. At Southwest’s preferred 31-32 inch pitch, the E-Jet seats 132 passengers.
Since the context was the 737-8 MAX, did Kelly mean, not smaller than the -8? This isn’t known.
Bjorn’s Corner: Analysing the 737 MAX crashes
October 25, 2019, ©. Leeham News: To better understand what went wrong in the Boeing 737 MAX crashes I have over the last half-year run Corner series around aircraft Pitch stability and Aircraft Flight Control systems and how these attack the problems of today’s airliners need for stable characteristics over a very wide flight envelope.
With this as a backgound, we will now in a series of Corners go into the Lion Air final crash report which is issued today, to understand what happened and why.
Is reengining the Boeing 767 a good idea? Part 2.
By Bjorn Fehrm
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Introduction
October 24, 2019, © Leeham News: According to FlightGlobal, Boeing is investigating reengining the 767-400ER with GE GEnx engines to produce a new freighter and perhaps a replacement for the NMA project.
We started an analysis of what this would look like last week where we analyzed the aircraft fundamentals. Now, we continue with the capacities of passenger and cargo variants.
Summary:
- The 767-400ER is one size larger than the largest NMA. It would be a competitor to the Boeing 787-8. This makes the variant doubtful as an NMA replacement.
- As a cargo variant, it adds less than 20% of cargo volume on top of the present freighter, the 767-300F. Is this attracitve enough to motivate a reengine for a freighter?
Boeing earnings call: still hopes for 4Q recertification
Oct. 23, 2019, © Leeham News: Boeing reaffirmed its belief that the Federal Aviation Administration will authorize a return to service for the grounded 737 MAX this quarter.
The FAA certification flight will occur soon, said Dennis Muilenburg, president and CEO.
He made the remarks during the third quarter earnings call today.
“We look forward to regulatory approval for return to service this quarter. This may include a phased approach” with other global regulators, Muilenburg said.
Boeing has hosted 545 participants more than 140 customers and regulators around the world to understand the technical changes. Meetings with more than 1,100 others, including the finance community which funds MAX acquisitions, also have been held.
At this defining moment, Boeing must take a leadership role to increase safety, he said.
We expect to maintain the current production rate of 42/mo, followed by incremental rate increases to 57/mo by the end of next year.
Majority of deliveries of stored production should be delivered in the first year, but it is clear deliveries will spill into 2021. Muilenburg was not more specific.
Boeing to cut 787 production rate, cites global trade environment
Oct. 23, 2019, © Leeham News: Boeing will cut the 787 production rate from 14 to 12 for two years beginning next year, the company said this morning.
“Given the current global trade environment, 787 production rate will be reduced to 12 airplanes per month for approximately two years beginning in late 2020,” it said, an apparent reference to the Trump Administration trade wars.
Boeing raised the 787 production rate in part in anticipation of orders from China. Donald Trump’s trade war with China has frozen orders by the giant country since 2017.
Boeing CEO Dennis Muilenburg previously said slow 787 orders were tied to China’s lack of them.
Mitsubishi’s M90 faces delay amid elaborate certification
By Bjorn Fehrm
October 23, 2019, ©. Leeham News: The Japanese News agency Nikkei writes the Mitsubishi Aircraft Corporation might announce a further delay to the delivery of the first M90 SpaceJet (previously the MRJ90). This time it’s the risk the first delivery to ANA, All Nippon Airways might slip out of 2020 and into 2021.
It’s the certification of the new jet which is requiring more time than expected as the Japan Civil Aviation Bureau, JCAB, is going about the certification work with typical Japanese thoroughness.
McAllister out, a new Deal at Boeing Commercial Airplanes
By Scott Hamilton
Analysis
Oct. 23, 2019, © Leeham News: Kevin McAllister’s departure yesterday as CEO of Boeing Commercial Airplanes comes as no surprise.
Only the timing—now instead of next year, as was widely surmised—caught people off guard.
Kevin McAllister, left, and Stan Deal, right, at an order signing. McAllister is out and Deal is in. Credit: Azal.az.
Reports conflict whether he resigned, was fired or (as one report put it), it was a “separation;” it really doesn’t matter.
Word was circulating for months, long before the 737 MAX grounding, that his was a fading star.
He was replaced by Stan Deal, CEO of Boeing Global Services.
That McAllister is the first high-profile casualty of the MAX grounding and recertification crisis is also not a surprise. That he would be sacrificed had been rumored for weeks. The New York Times openly wrote about this prospect 10 days ago.
But tying McAllister to the MAX crisis is to some degree scapegoating.
As I wrote Oct. 7, the fingers of blame for the crisis point much higher than McAllister.
Boeing recaps actions ahead of earnings call
Oct. 22, 2019: Boeing today recapped its actions to bring the 737 MAX back to certification and service, ahead of its earnings call tomorrow.
The company has taken huge hits since Friday when the information about pilot text messages were revealed by Reuters. The Seattle Times today has a detailed report that makes an independent assessment of the context of the text messages. The story, by Dominic Gates, who’s reporting has been ground-breaking, supports Boeing’s narrative in this case.
Boeing’s press release recapping its actions to fix MAX and return it to service it below. LNA doesn’t publish press releases except in extraordinary circumstances. Given the bashing Boeing has been under–including by LNA–we’re making an exception in this case.
NMA off the table in 2020–and maybe entirely
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Introduction
Oct. 21, 2019, © Leeham News, New York: What is the impact of the 737 MAX grounding on Boeing’s plan for the New Midmarket Airplane (NMA)?
This question was common along the sidelines last week of the Wings Club and two conferences in New York City. (See Pontifications.)
There is, of course, no definitive answer today.
But the plurality of opinion is that the NMA is off the table for the indefinite future.
Summary
- There is no clear picture when the MAX will be recertified, either by the FAA or other regulators.
- There is no clear picture how long Boeing will maintain production rate at 42/mo, which depends on how much longer it must wait for recertification.
- With turmoil in the executive suite (the CEO lost his chairman’s title Oct. 11), there is no clear picture how long Dennis Muilenburg has a job.
- With, apparently, Boeing Commercial CEO Kevin McAllister also in the cross hairs, there is no clear picture of executive suite stability at Longacres, the BCA HQ.
- Any successors for Muilenburg and/or McAllister will want to review Boeing’s entire product strategy.
- Therefore, do not expect any go-forward for NMA in 2020.
Other than that, everything is fine.
Preferred 737 MAX return to service timeline for Airlines
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By Vincent Valery
Introduction
Oct. 21, 2019, © Leeham News: As Boeing sorts out final requirements with regulators for the 737 MAX return to service, preparations to resume deliveries are in full steam.
The company is hiring scores of temporary workers to return grounded and built but not yet delivered airframes. A note from Alliance Bernstein estimates that Boeing will be able to hand over 25 aircraft per month on top of those that come off the assembly line.
After taking hefty losses and having lost its most robust cash flow source for almost a year, Boeing will want to hand over as many aircraft to airlines as fast as possible.
Do all 737 MAX customers, likewise, want their aircraft back in service as soon as possible?
Summary
- National regulators will drive return to service timeline;
- Passenger demand variations;
- 737 MAX exposure by region;
- Demand peaks might dictate who flies first;
- Maintenance, compensation, and other considerations.