Leeham News and Analysis
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Leeham News and Analysis
- Bjorn’s Corner: Air Transport’s route to 2050. Part 21. May 9, 2025
- Does an A220-500 need a new wing and engines? Part 2. May 8, 2025
- Embraer downplays tariff impact on 2025 results May 6, 2025
- JetZero readies effort for private equity fund raising May 5, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 20. May 2, 2025
Boeing MAX crisis overshadows other challenges
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July 29, 2019, © Leeham News: The 737 MAX crisis overshadows everything else right now at Boeing.
This includes forward orders, weak customers and production gaps on the 787 line, which right now is the cash flow cow at Boeing Commercial Airplanes.
Boeing’s production line for the 787 is filled through 2021, but after that, there are big gaps. Source: Leeham Co. Click on image for a crisp view.
Executives only briefly, and obliquely, touched on the 787 during the 2Q2019 earnings call last Wednesday.
This prompted LNA to examine the details of the backlog and production rates. The 787 is current being produced at a rate of 14/mo.
There are clear signs of challenges, both near- and medium-term for the 787.
Summary
- Weak customers threaten to create deferred deliveries near-term.
- There will be about 20 A330s and 777s coming off lease each year from 2021-2026 on top of retirements. Airbus and Boeing see these are replacement opportunities.
- The production back delivery stream falls off the cliff in 2022.
Pontifications: MAX market share holding steady, so far
By Scott Hamilton
July 29, 2019, Leeham News: Despite threats and fears of cancellations for the Boeing 737 MAX following two fatal accidents of virtually brand new -8 MAXes, few order cancellations directly attributable to the crashes have occurred.
So far, there isn’t a discernible shift to Airbus, either, data shows.
Bjorn’s Corner: Fly by steel or electrical wire?
By Bjorn Fehrm
July 25, 2019, ©. Leeham News: Last week’s Corner which dealt with Airbus’ issue with an updated A321neo Fly By Wire (FBW) and how it was unrelated to the issue of the Boeing 737 MAX, gives a good segue to a Corner series about the possibilities of FBW versus classical flight controls when it comes to tuning an airliner’s flight characteristics.
The two different control principles present the designer with very different challenges and possibilities.
The Fly-By-Wire Airbus A321XLR. Source: Airbus.
Analyst shrug off possible 737 production shut down
July 25, 2019, © Leeham News: Aerospace analysts brushed aside Boeing’s warning yesterday that the possibility exists the 737 MAX production line might be shut down in the airplane doesn’t return to service (RTS) in the fourth quarter.
Boeing’s statement, on its 2Q2019 earnings call, created headlines in the press coverage, including on LNA.
But analysts shrugged off the news.
Separately, Southwest Airlines today announced it has removed the MAX from its schedule to January.
Below is a synopsis of reactions in notes issued last night and this morning.
How much of an NMA market will the Airbus A321XLR capture? Part 2
By Bjorn Fehrm
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Introduction
July 25, 2019, © Leeham News: We continue our discussion from last week of what part of an NMA market the Airbus A321XLR would capture.
We started the study by comparing the aircraft with a common yardstick. It brought some revealing insights. Now we continue by looking at the airline routes these aircraft can cover and their economics when covering these routes.
Summary:
- The NMAs and the A321XLR cover the same routes with small differences in range performance.
- The major difference is in their passenger capacity, where they are complementary rather than competitors.
Boeing warns of production reduction, complete shut down of MAX if return to service delayed beyond 4th quarter
Dennis Muilenburg, Boeing CEO. Source: Reuters.
July 24, 2019, © Leeham News: Boeing’s chief executive officer today warned that if the 737 MAX return to service is delayed much beyond the anticipated fourth quarter RTS, reducing production from the current 42/mo or a complete production shut down could happen.
Either scenario would have huge and disruptive impacts to the supply chain.
CEO Dennis Muilenburg made the remark on the second quarter earnings call.
Last week, Boeing said it hopes for RTS in November. Today, Muilenburg characterized the hoped-for return “early in the fourth quarter.”
But he called the recertification processes and global regulatory reviews “dynamic.” There is no guarantee the RTS will happen on the timeline Boeing hopes.
Updated: Additional comments from the Question and Answer portion of the earnings call.
Boeing 2Q earnings: down as expected, 777X delay confirmed
July 24, 2019, © Leeham News: Boeing’s first quarter and first half revenue is down $9bn vs last year as the impact of the 737 MAX grounding takes a full hit.
The MAX was grounded March 13, near the end of the first quarter, with limited understanding of the financial impact. The plane will be grounded through the entire third quarter and well into the fourth quarter, Boeing has acknowledged. Some believe a return to service won’t occur until into the 1Q2020.
Boeing’s 2Q2019 earnings press release has details.
Boeing also acknowledged the 777X will be delayed, with first flight now coming next year due to engine issues previously disclosed. Entry into Service is still targeted for 2020. LNA sees EIS slipping to 2021.
Boeing so far says the FAA certification process scrutiny for the 737 MAX hasn’t affected the 777X, but LNA and industry participants believe that the FAA must be reviewing what it’s done in the past and looking at what processes are to come. The consensus, and LNA’s conclusion, is that the FAA’s revisiting the process (if this thesis is correct) will result in a delay as well.
Lufthansa Airlines, the first launch order for the 777X, has been notified by Boeing that first delivery is now scheduled for December 2020. Emirates Airline has been notified first delivery is January 2021. LNA believes Lufthansa’s delivery will slip into 2021.
Below are first reactions from analysts to Boeing’s 2Q results.
Trans-Atlantic market fragmentation hurts big widebodies
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By Vincent Valery
July 22, 2019, © Leeham News: Development of single-aisle aircraft that now have ranges of plus-or-minus 4,000 nautical miles are fragmenting hub markets needed to fill large twin-aisle aircraft.
Just as twin-engine widebodies began fragmenting routes needed to fill the Boeing 747 and later the Airbus A380, the Boeing 737-8 and Airbus A321LR/XLR appear to be contributing to weak demand for the Boeing 777X and Airbus A350-1000.
With launch of the Airbus A321XLR last month and expected New Midsize Airplane once the MAX crisis is over, some markets might have structures dramatically altered in the second half of next decade. The prime candidate is the US East Coast–Europe market. We will investigate through historical examples how things might turn out.
Rendering of Boeing NMA-7. Source: Leeham Co.
Pontifications: Embraer counts on Boeing heft for E2 sales boost
By Scott Hamilton
July 22, 2019, © Leeham News: Embraer still appears to be in a bit of a holding pattern following the Paris Air Show in which it announced orders and commitments for only 76 EJets. Two additional orders announced at the show were previously under the Unidentified category.
This seems to be following a pattern set with the Bombardier C Series, in which sales were slow while the market waited for the deal to close in which Airbus acquired 50.01% of the C Series program.
Analysts react to Boeing’s 2Q charge, cost and RTS announcement
July 19, 2019, © Leeham News: Boeing yesterday announced a $4.9bn charge connected to customer compensation for the 737 MAX grounding. It also announced a $1.7bn additional cost associated with the accounting block and forecast a 4q2019 return to service.
Wall Street analysts overall were positive with the new. Aftermarket stock trading was up; pre-market trading today is slightly down from the aftermarket high.
Below are excerpts of research notes issued last night and this morning.