Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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- Bjorn’s Corner: Air Transport’s route to 2050. Part 20. May 2, 2025
- Supplier Howmet exceeds expectations despite tariffs May 1, 2025
Boeing suppliers ramp up schedule for MAX: 52/mo by July, 57/mo by August
Source: Boeing.
April 29, 2019, © Leeham News: Boeing reduced the production rate on the 737 line in mid-April from 52/mo to 42/mo in response to the grounding of the airplane by regulators worldwide.
The company and others said they didn’t know how long the airplane would be grounded.
But Boeing told suppliers to keep producing parts, components and the fuselage at rate 52.
The announcement was made April 5. At the same time, Boeing gave suppliers the rate ramp-up schedule.
Impact of MAX grounding emerges with earnings reports
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Introduction
April 29, 2019, © Leeham News: With first quarter financial results beginning to be reported, the impact of the grounding of the Boeing 737 MAX is beginning to emerge.
Boeing 737 MAXes stored at Everett Paine Field. Photo by Jennifer Schuld.
The first out was from Boeing itself, followed by a few of the airlines that operated the MAX before it was grounded March 13.
Boeing reported the grounding cost it about $1bn, for just the two weeks the airplane has been on the ground.
Norwegian Air Shuttle, which was using the MAX on new trans-Atlantic services, lost millions of dollars.
American Airlines will take a $350m hit from the groundings.
Southwest Airlines surprised many with a stronger-than-expected first quarter despite having 34 MAXes on the ground and a cost of $200m.
Air Canada extended the removal of its MAX fleet from its schedules another month, to Aug. 1.
Summary
- JP Morgan doesn’t predict deliveries resuming until the fourth quarter.
- The investment bank sees 200 MAXes in inventory accumulating and cash losses of $1.5bn per month while the plane is grounded.
- Wall Street hopes that 2020 will be a normalized year.
- If simulator training is required by regulators before the MAX can return to service, JP Morgan estimates more than 4,400 pilots need to be trained.
Pontifications: “We own it, but…”
By Scott Hamilton
April 29, 2019, © Leeham News: Boeing got roundly thumped for blaming the pilots in the Lion Air flight 610 crash involving the 737 MAX last October.
It took months before Boeing CEO Dennis Muilenburg issued a video in which, among other things, he said, “We own it.” He was referring to safety of the MAX.
This was widely interpreted as Boeing stepping up and taking responsibility for at least some of the causes of the Lion Air and Ethiopian Airlines crashes.
Last Wednesday, he took it all back.
On the first quarter earnings call, Muilenburg denied there was any “technical slip or gap” in designing the now famous MCAS system. He said “actions not taken” contributed to the crash, a thinly veiled reference once again to pilot error. (More on this below.)
Bjorn’s Corner: Time to reassess the safety standards for our airliners
By Bjorn Fehrm
April 26, 2019, ©. Leeham News: In the wake of the 737 MAX crashes the standards to which Boeing and the FAA qualified and approved the 737 MAX MCAS function is questioned.
FAA has called the world’s aviation regulators to a meeting on the 23rd of May to discuss how the revised MCAS function will be approved. But it’s time to discuss more than how the updated MCAS shall pass.
Airbus, Boeing backlogs in US, EU and tariff exposure
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Introduction
April 25, 2019, © Leeham News: With the European Union now listing aircraft among the US products that will be subject to tariffs, in retaliation for the United States plan to levy tariffs on airplanes and other goods, Airbus faces a greater exposure than Boeing in a trade war.
The US proposes tariffs on aircraft, fuselages, wings and other components produced by the four Airbus member states: France, Germany, Spain and the UK.
Summary
- Airbus has more aircraft in backlog to the US than Boeing does to the EU.
- Delta Air Lines is the biggest Airbus US customer, followed by lessor GECAS.
- Ireland, with its lessors and discount carrier Ryanair, is Boeing’s biggest customer in the EU.
- The UK carriers are a distant second to Ireland, but Brexit muddles the picture.
Initial analyst reaction to Boeing 1Q earnings
April 24, 2019: Initial analyst reaction to Boeing’s 1Q2019 earnings, which were impacted by the grounding of the 737 MAX two weeks before the engine of the quarter, was positive.
Pre-market trading was initially up more than $6; at this writing an hour later, this eased, coming off slight to being up just under $6.
Here is the initial reaction from analysts:
Boeing 1Q earnings down on MAX grounding; full impact to come
April 24, 2019, © Leeham News: Boeing took a $1bn revenue hit in the first quarter ended March 31, following the grounding of the 737 MAX on March 13.
Earnings from operations reported today were off $525m; net earnings were down $328m.
The press release is here.
The stock market took the news in stride; pre-market trading saw Boeing stock rise more than $6 (1.66%) an hour before opening.
The MAX was grounding March 13, affecting only two weeks of the first quarter. The full impact is to come. As a result, Boeing suspended guidance for the year and will reissue it at a later date.
Mitsubishi adding two MRJ90s to flight test fleet
By Bryan Corliss
April 24, 2019, © Leeham News: Mitsubishi is close to completing two additional MRJ90s that should join the company’s flight test fleet this summer.
Mitsubishi Aircraft Corp. President Hisakazu Mizutani also reported last week that the U.S. Federal Aviation Administration has granted the program a letter of authorization, which is a milestone toward getting a final type certificate allowing the plane to enter service.
Mizutani spoke in Nagoya, Japan, on April 16, delivering Mitsubishi’s regular quarterly update on the program’s progress.
Electric aircraft builder announces new engine option
By Bryan Corliss
April 22, 2019, © Leeham News: Electric aircraft motor builder MagniX will celebrate Earth Day today by announcing it has been chosen as one of two powerplants for Eviation Aircraft’s proposed nine-seater Alice passenger plane.
“We have been successfully testing the MagniX system with our Alice aircraft propeller for quite some time now with great results,” Eviation Chief Executive Omer Bar-Yohay said in a statement.
The MagniX motor has more than 1,500 hours on a test stand, according to Roei Ganzarski, who is CEO of the suburban Seattle engine-builder.
The Alice is a clean-sheet electric aircraft design developed by Eviation, an Israeli company that has established a testing/production facility in Prescott, AZ. Eviation has announced plans to fly the Alice at Le Bourget this summer.
EU lists goods, including airplanes, subject to tariff in WTO trade war
April 22, 2019, © Leeham News: The European Union late last week released its list of US goods, including non-military airplanes (read: Boeing 
airliners) that will be subject to tariffs if the US proceeds to levy tariffs on $11bn in goods.
The EU upped the ante, valuing its list at up to $20bn.