Aug. 2, 2016, © Leeham Co.: Boeing officials increasingly downplay the prospect of the 787 production rate increasing to 14/mo by the end of the decade from the current 12/mo, reflecting uncertainty over the strength of the wide-body market in the near-to-medium term.
Dennis Muilenburg, CEO of The Boeing Co., said during the company’s 2Q2016 earnings call July 27 that “we haven’t pinned down a specific decision point [on ramping up to 14/mo] yet because we’re going to keep a close eye on the market. The signals from our customers, we’ve got time to do our due diligence here.
Figure 1. Boeing 787 Orders and Deliveries. Click on image to enlarge.
“Our principle here is to keep wide body supply and demand in balance. And we’re confident in the 787 program across that span of scenarios, and we’re going to continue to work campaigns to fill out to the 14 a month rate step-up, and we’ll evaluate timelines and decisions around that. But you can be very confident that whatever we decide, we’re going to keep supply and demand in balance. We’re going to do it efficiently and productively, and all of this again is enveloped by our expectation of a year-over-year cash growth business.”
Boeing noted that the program is sold out in 2018 and has some slots available in 2019. At rate 12, the likelihood of these slots being filled may be challenging. Although the number itself isn’t great—27, according to Ascend—finding enough customers for delivery in 2019 could be challenging in the current soft environment, and with competition from a much lower priced Airbus A330, whether a CEO or NEO. The challenge becomes greater the farther out in the future.
If Boeing went to rate 14, this is another 24 airplanes per year that have to be sold. (Figure 1.)
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Air Lease sounds caution note for Airbus, Boeing
Air Lease Corp. made the predictions on its 2Q2016 earnings call Friday.
ALC also predicted Boeing will further lower the production rate of the 777 Classic from the announced 5.5/mo in 2018. ALC did not specify a rate, but some aerospace analysts believe a rate of 4/mo is coming.
They also believe neither Boeing nor Airbus will increase production rates of the 737 to 57/mo or A320s to 60/mo. Boeing announced previously that it is considering increasing the 737 rate from the announced 52/mo, effective 2018, to 57/mo. Airbus previously announced it will increase the production rate of the A320 to 60/mo and is considering a rate of 63/mo.
Airbus is bringing the rate up from 44/mo to 60 by 2018.
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22 Comments
Posted on August 10, 2016 by Scott Hamilton
Airbus, Boeing, Leeham News and Comment
737, 777 Classic, 787, A320, Air Lease Corp., Airbus, Boeing, John Plueger
Embraer books 1H2016 loss and lowers guidance
By Bjorn Fehrm
August09, 2016, ©. Leeham Co: Embraer presented its second quarter and first half 2016 results on July 29, posting a loss and lowering guidance for the year.
The company is in a bridge period on its commercial aircraft side, with sales and deliveries focusing on the scope clause optimized E-Jet 175 while the company readies the upgraded E-Jet E2 series.
Figure 1. Embraer’s best-selling E175 regional jet. Source: Embraer
At the same time, the company’s buoyant Business Jet side has started to feel the slump that has hit this market since 2014. Combined with a domestic Defence and Security market which is dependent on Brazil’s economy, it’s been a first half of 2016 which has been a bit tougher than Embraer planned.
The company judges that the slow Business jet sales will continue and has therefore lowered its full year guidance. Read more
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Posted on August 9, 2016 by Bjorn Fehrm
Embraer
E-Jet, E175, E190 E2, Embraer, GTF, Pratt & Whitney
Boeing slightly leads Airbus in YTD orders
Aug. 8, 2016, © Leeham Co.: Boeing continues to lead Airbus in the race for orders post-Farnborough Air Show (FIA), but there are key orders announced there that haven’t been booked on the two OEMs order books.
Boeing hasn’t booked most of the firm orders yet from Volga Dnepr/Air Bridge Cargo announced at the show for 747-8Fs. Airbus hasn’t booked the 100 announced orders for A320s from AirAsia. Boeing also announced some 737 MAX orders that need to be firmed up into contracts before booking to its website.
The AirBridge orders will be closely watched. Boeing said at Farnborough that the MOU for 20 747-8Fs announced at the Paris Air Show a year earlier were now a firm contract, over six years. But Boeing and AirBridge did not say how many were firm orders, other than to identify four aircraft that were previously delivered under leases as part of the 20.
Reuters believes that 13 of the 20 are firm. Those four previous deliveries appear to be part of the 13, but this is unclear. Airfinance Journal reported that seven of the 20 will be taken by Boeing Capital Corp and leased to AirBridge. If true, this adds about $1bn to the Boeing balance sheet for customer financing.
This detail is important because AirBridge is very possibly the last customer that will order the 747-8. Boeing said it now has a backlog to 2019, but because the Airbridge transaction remains murky at best, the details are equally murky.
Drilling down into details of the orders placed through July:
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Posted on August 8, 2016 by Scott Hamilton
Airbus, Boeing, Premium
737, 747, 767, 777, 787, A320, A330, A350, Airbus, Boeing, FBR & Co
Pontifications: Twelve new designs in 10 years spurred orders
By Scott Hamilton
Aug. 8, 2016, © Leeham Co.: The book:bill for Airbus and Boeing this year will be hard-pressed to reach one. Airbus has a better shot, given lower production rates. But the recent years of record-setting orders are over for now.
Unlike some, this doesn’t represent a bursting bubble to LNC. Rather, it’s a natural progression of the cycles that are historically seen.
It’s necessary to put some context into the recent years of these unprecedented number of orders.
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17 Comments
Posted on August 8, 2016 by Scott Hamilton
Airbus, Boeing, Bombardier, Comac, CSeries, Irkut, Mitsubishi, Pontifications
737 MAX, 747-8, 787, A320, A330, A330neo, A350, A350 XWB, Airbus, Boeing, Bombardier, C919, Comac, EJet E2, Ejet-E1, Embraer, Irkut, MC-21, Mitsubishi, MRJ
Bombardier records $628m loss in 1H2016
Aug. 5, 2016: Bombardier reported its second quarter and half year results today, with a net loss of $628m for the half and a $490m net loss for the quarter.
Alain Bellemare, CEO of Bombardier. CBC photo via Google images.
Results for the commercial division recorded a loss before interest and taxes of $586m.
Ilyushin Finance Corp., one of the customers for the C Series that’s been on LNC’s “Red” category as a high-risk customer, reduced its order for 32 CS300s to 20. IFC also dropped five options.
“We continue to make very good progress executing our turnaround plan,” said Alain Bellemare, President and Chief Executive Officer, said in a statement. “We delivered on our financial commitments, achieved our program milestones and positioned Bombardier to meet both our full year guidance and 2020 goals.”
JP Morgan was the first of the research notes we received today, providing this take:
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20 Comments
Posted on August 5, 2016 by Scott Hamilton
Bombardier
Bombardier, Bombardier 1H2016 results, C Series, Ilyushin Finance Corp.
Bjorn’s Corner: Enhanced Vision
By Bjorn Fehrm
August 05, 2016, ©. Leeham Co: Last week we described Synthetic Vision and discussed why it hasn’t got its breakthrough yet. If we would have taken things chronologically, we should have started with Enhanced Vision systems.
Once again Gulfstream Business jets was the first to introduce Enhanced Vision Systems (EVS) into service. In 2001 it was certified as an option to the Gulfstream’s flight deck, using an infrared camera to generate a picture of what happens in front of the aircraft when visibility is bad, Figure 1.
Figure 1. Gulfstream Business Jet with Enhanced Vision IR camera. Source: Gulfstream.
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7 Comments
Posted on August 5, 2016 by Bjorn Fehrm
Bjorn's Corner
Bombardier Global, Dassault Falcon, Enhanced Vision, Gulfstream, Synthetic Vision
State officials need to act now, ahead of lean times coming at Boeing Everett
August 4, 2016 (c) Leeham Co.: With the news that Boeing may terminate the 747-8 program, effective around 2019 when the current backlog expires, the obvious
Washington Gov. Jay Inslee (D) is running for reelection. He needs to think about the coming lean times at the Boeing Everett plant in less than three years. So does his challenger and all the incumbents and candidates for Legislature. USA today photo via Google images.
question arises: what happens to the assembly line space now occupied by the massive airplane?
Given that the State of Washington elected and appointed officials generally view Boeing in a reactive rather than a proactive mode, an open letter to them seems appropriate.
It’s imperative that Washington officials begin planning now for some lean times ahead for the Everett plant. Waiting until 2019 is too little, too late.
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31 Comments
Posted on August 4, 2016 by Scott Hamilton
air force tanker, Airbus, Boeing, Middle of the Market, MOM
737, 747-8, 767, 777, 777X, 787, air force tanker, Airbus, Boeing, Jay Inslee, KC-46A
Irkut MC-21-300 analysis, Part 3
By Bjorn Fehrm
Subscription required.
Introduction
August04, 2016, ©. Leeham Co: With the classification of the Irkut MC-21-300 done in terms of its size segment (it’s close to the Boeing 737 MAX 9 in size) and the key data of the aircraft analyzed, it’s now time to look at aircraft efficiency and payload-range performance.
Figure 1. MC-21-300 prototype on the final assembly line. Source: Irkut
We will do this with two cabin configurations for the aircraft. The first will be the nominal two class seating as proposed by the OEMs. For the second, we use a single class layout with 30-inch seat pitch.
Summary:
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3 Comments
Posted on August 4, 2016 by Bjorn Fehrm
Boeing, CFM, Irkut, Pratt & Whitney, Premium, United Aircraft, United Engine Corp.
737 MAX 9, Boeing, GTF, Irkut, MC-21-300, Pratt & Whitney, UAC, UEC
Boeing’s 2Q2016 results and the 787
By Bjorn Fehrm
August 03, 2016, ©. Leeham Co: Boeing released its 2Q 2016 results last week. This is always a good opportunity to look at information regarding its 787 Dreamliner project. Last week’s call did not disappoint even if the information leaves plenty of room for interpretation.
The first information was the production cost of the fourth and fifth Dreamliner that were produced. According to the stock market filing (10-Q), these cost over $500m per unit. The further information we got was the production cost for the 38 Dreamliners that were produced in the quarter and the relationship of the 787-8 costs to the 787-9.
As Boeing uses program accounting, these normally very hush-hush figures have to be shared with the public. Not so with other aircraft OEMs that use unit accounting for production. Read more
46 Comments
Posted on August 3, 2016 by Bjorn Fehrm
Boeing
787, 787-10, 787-8, 787-9, Boeing, program accounting
Boeing 787: Stable Rate, Hike Rate or Cut Rate
Aug. 2, 2016, © Leeham Co.: Boeing officials increasingly downplay the prospect of the 787 production rate increasing to 14/mo by the end of the decade from the current 12/mo, reflecting uncertainty over the strength of the wide-body market in the near-to-medium term.
Dennis Muilenburg, CEO of The Boeing Co., said during the company’s 2Q2016 earnings call July 27 that “we haven’t pinned down a specific decision point [on ramping up to 14/mo] yet because we’re going to keep a close eye on the market. The signals from our customers, we’ve got time to do our due diligence here.
Figure 1. Boeing 787 Orders and Deliveries. Click on image to enlarge.
“Our principle here is to keep wide body supply and demand in balance. And we’re confident in the 787 program across that span of scenarios, and we’re going to continue to work campaigns to fill out to the 14 a month rate step-up, and we’ll evaluate timelines and decisions around that. But you can be very confident that whatever we decide, we’re going to keep supply and demand in balance. We’re going to do it efficiently and productively, and all of this again is enveloped by our expectation of a year-over-year cash growth business.”
Boeing noted that the program is sold out in 2018 and has some slots available in 2019. At rate 12, the likelihood of these slots being filled may be challenging. Although the number itself isn’t great—27, according to Ascend—finding enough customers for delivery in 2019 could be challenging in the current soft environment, and with competition from a much lower priced Airbus A330, whether a CEO or NEO. The challenge becomes greater the farther out in the future.
If Boeing went to rate 14, this is another 24 airplanes per year that have to be sold. (Figure 1.)
Read more
61 Comments
Posted on August 2, 2016 by Scott Hamilton
Airbus, Boeing, Delta Air Lines, Emirates Airlines
777, 787, 787-10, 787-8, 787-9, A330ceo, A330neo, A350-900, Aeroflot, Airbus, Boeing, Credit Suisse, Delta Air Lines, Dennis Muilenburg, Emirates Airline, Greg Smith, JP Morgan
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