Leeham News and Analysis
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Leeham News and Analysis
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- Bjorn’s Corner: Air Transport’s route to 2050. Part 27. June 20, 2025
Bjorn’s Corner: Landing after navigation, Part 2
By Bjorn Fehrm
13 May 2016, © Leeham Co: Last week we started to describe what is necessary to make a precision approach after a flight. We described the rather elaborate installations needed for the classical precision approach with an ILS system. It requires two transmitters and large antennae installations for each runway.
We will now describe the system which will replace ILS as worldwide instrument landing system, an augmented Global Navigation Satellite System (GNSS), where GPS is the variant provided by the US Department of Defence, Figure 1. Other GNSS are Russia’s GLONASS and Europe’s Galilleo.
Figure 1. The GPS system consists of up to 24 satellites which deliver position, velocity and time. Source: Wikipedia.
The problem with a non-augmented GPS is the precision. Classically the accuracy was worst case any where in the World around 100m horizontally and 150m vertically, but that was when the US military deliberately reduced the accuracy for civil use (Selective Availability). Today this deliberate reduction has stopped and the accuracy is 25m horizontally and 43m vertically worst case.
This is not enough for a precision approach. We will now describe what is done to bring the accuracy to a level where precision approaches can be flown with GPS. Read more
Analyst reaction to Boeing investors day
May 12, 2016: Analysts were largely underwhelmed in their take-aways from the Boeing investors day. Their reactions:
Bernstein Research (Outperform)
| Boeing held its investor conference this week, including tours of Everett and Renton facilities. Overall, we viewed the event as positive, with management emphasizing strong free cash flow growth through the decade, with potential for margin expansion.
Consistent with our analysis, the 737 and 787 are described as sold out through 2019, with a decline in 777 deliveries in 2018. The 787 should serve as the key driver of rising free cash flows, along with lower capex. Margins should be aided by flat R&D. Cost reduction is key to Boeing’s margin goals, which should be helped by a large backlog with prices set. We are more positive on services at this stage, which is a key focus. Defense is now expected to see modest growth. We rate BA Outperform, TP $184. |
Analysts skeptical going into Boeing investors day
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Introduction
May 12, 2016, © Leeham Co.: Boeing executives faced skeptical aerospace analysts at its annual investors day yesterday in Seattle.
Presentations by Dennis Muilenburg, CEO of The Boeing Co., Chairman, President and Chief Executive Officer, CFO Greg Smith, Ray Conner, CEO of Boeing Commercial Airplanes, and Leanne Caret, CEO of Boeing’s defense unit, didn’t appear to have any immediate impact on the stock price for those listening in on the webcast. Stock was flat during the day. Notes from the analysts attending in person won’t be issued for a day or two.
We met with seven analysts on Tuesday, before and after their tour of the Everett (WA) wide-body plant facility to gauge their points of interest going into the investors day yesterday. We also talked with some of them on Wednesday after the presentations.
Summary
- Skepticism was high over how Boeing believes it can recover the $29bn in deferred production costs on the 787 program. CFO Smith addressed this during his Wednesday presentation.
- Boeing finally conceded the 777 Classic production rate will come down, to 5.5/mo by 2018. Officials initially claimed the rate would remain at 8.3/mo to the entry-into-service of the 777X, later lowering to 7/mo from next year.
- There is a belief that Boeing’s product strategy is now on the defensive to Airbus. BCA CEO Conner believes otherwise.
Boeing investors day: Conner: today’s hard decisions assure future
May 11, 2016: Decisions Boeing has made today have been hard, but assure Boeing will be around another 100 years, says Ray Conner, CEO of Boeing Commercial Airplanes. “We compete every day with aggressive competitors.”
Note: Boeing is holding its annual investors’ day (really a half-day) today, with presentations by: Dennis Muilenburg , Chairman, President and ChiefExecutive Officer, Greg Smith , Chief Financial Officer and Executive Vice President of Corporate Development & Strategy, Ray Conner , Vice Chairman and Commercial Airplanes President and Chief Executive Officer and Leanne Caret , Executive Vice President and Defense Space & Security President and Chief Executive Officer. We’ll report on the presentations by Muilenburg, Smith and Conner, but not the DSS unit.
Conner sees continued growth in aircraft demand. Boeing’s backlog continues to grow, but Boeing also continues to monitor global conditions. But compared with 2001 after 9/11, Boeing’s backlog is more diverse in the world and among the type of customers. Deferrals, cancellations and skyline adjustments are “way, way below historical averages.”
Boeing investors day: Smith: becoming a global industrial champion
May 11, 2016: Boeing strives to be a global industrial champion, not just against its peer group, says Greg Smith, the chief financial officer of The Boeing Co. Boeing has a continuing commitment to returning cash to shareholders, repurchasing 150 million shares, he said.
Note: Boeing is holding its annual investors’ day (really a half-day) today, with presentations by: Dennis Muilenburg , Chairman, President and ChiefExecutive Officer, Greg Smith , Chief Financial Officer and Executive Vice President of Corporate Development & Strategy, Ray Conner , Vice Chairman and Commercial Airplanes President and Chief Executive Officer and Leanne Caret , Executive Vice President and Defense Space & Security President and Chief Executive Officer. We’ll report on the presentations by Muilenburg, Smith and Conner, but not the DSS unit.
Boeing has had 17 production rate increases in recent year, with five more on the way.
Boeing investors day: Muilenburg: we cannot stand still
Dennis Muilenburg, CEO of The Boeing Co.
May 11, 2016: Boeing is in the strongest position it’s ever been but Boeing cannot stand still, says Dennis Muillenburg, chairman and CEO of The Boeing Co. Customers want high value and low costs.
“Our goal is to set a higher bar for ourselves and be the best in aerospace,” Muilenburg told an international group of aerospace analysts at the company’s annual investors’ day. “You’ll see us emphasizing more and more ‘one Boeing.'”
Note: Boeing is holding its annual investors’ day (really a half-day) today, with presentations by: Dennis Muilenburg , Chairman, President and Chief Executive Officer, Greg Smith , Chief Financial Officer and Executive Vice President of Corporate Development & Strategy, Ray Conner , Vice Chairman and Commercial Airplanes President and Chief Executive Officer and Leanne Caret , Executive Vice President and Defense Space & Security President and Chief Executive Officer. We’ll report on the presentations by Muilenburg, Smith and Conner, but not the DSS unit.
Muilenburg said Boeing will lead with innovation, including more modern factories, as evidenced by the new wing production plant for the 777X wing analysts viewed Tuesday.
Airbus, Boeing split YTD orders leads
May 10, 2016: Airbus and Boeing split the leads for orders year-to-date through April 30 (May 2), following the monthly total released today by Airbus. Airbus led in wide-body orders by a wide margin. Boeing thumped Airbus in narrow-body orders.
Pontifications: Derivatives at Boeing
By Scott Hamilton
May 9, 2016, © Leeham Co.: Last week proved to be significant when the CEO of The Boeing Co. and the head of the 737 MAX program each said the company is looking at revising its smallest member of the family, the MAX 7, and potentially enlarging the biggest member, the MAX 9.
Neither prospect was news. Jon Ostrower of The Wall Street Journal revealed the prospect of what he called the MAX 7.5, a slightly larger airplane than the current MAX 7. The idea of an airplane larger than the MAX 9, based on the MAX 9, was floated when Jim McNerney was still CEO.
What was news is that for the first time, the Boeing CEO and the head of the MAX program went on record essentially admitting the MAX line isn’t well positioned against Airbus after all. Or, on the lower end, to Bombardier.
How good is a MAX 7X and why would it replace the original?
By Bjorn Fehrm
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Introduction
May 9, 2016, © Leeham Co: Boeing is considering changing the 737 MAX 7 in a rather drastic way. The present model would be hitting the market as the last of the MAX models in 2019. It hasn’t been selling well. In fact, there are only two legacy airlines and a start-up that have ordered the MAX 7.
Right now, there are just 60 orders for an aircraft series which has garnered 3,100 orders in total.
Figure 1. Boeing’s 737 MAX 7 as presently defined. Source: Boeing
Sources have long told LNC that Boeing doesn’t really want to build the MAX 7. But Southwest Airlines needs the airplane for short-runway airports like Chicago Midway and Burbank (CA) and has resisted suggestions to up-gauge. The other airline that has ordered the MAX 7 is WestJet, which has thin markets in Canada that don’t justify a MAX 8. And there is a third customer, a start-up in Canada that has yet to begin operations.
With the C Series gaining momentum, the cancellation of the MAX 7 now seems off the table. Instead, Boeing is thinking about making it better, the MAX 7X project. What is it, and why would it be better than the original MAX 7? We use our aircraft model to answer the questions.
Summary
- The 737-700, and therefore MAX 7, was defined a continuation of the 737-300 at 126 passengers in a domestic two class configuration.
- Bombardier is offering 135 seats in a similar, but more comfortable, CS300 cabin with an aircraft which is lighter and more economical than the MAX 7.
- The already meager order book for the MAX 7 is therefore getting more pressure from a resurging C Series line.
- Boeing is now attempting to convince its customers that a larger MAX 7, based on MAX 8, would be a better aircraft for the customers (and for Boeing). We reveal why.
Bjorn’s Corner: Landing after navigation
By Bjorn Fehrm
6 May 2016, ©. Leeham Co: In a recent Corner, we covered how to navigate a modern airliner with the help of the Flight Management System (FMS). We described how the FMS uses different navigation receivers to fly the aircraft via the autopilot along the flight plan. In the end, we used a special instrument landing system to land at the Nice Airport.
The classical way to land on airports in bad weather has been to use a VHF based Instrument Landing Systems called ILS. Figure 1 shows the large installations of transmitter antennas which are necessary to get such an ILS beam to fly on for landing at a runway.
Figure 1. Antennae to form the lateral ILS localiser beam for a runway. Source: Wikipedia.
The antennae we see are only for the lateral beam, the Localiser. It guides us in the horizontal plane. There is a second transmitter with associated antennae which forms the vertical beam so that we have a two dimensional glide path to land on, with the vertical part called a glide slope.
It’s clear that it’s costly to install such ILS equipment for each runway for an airport. There have not been good alternatives to the classical ILS system until now. Several alternative systems have been proposed based on shorter wave signals to get the size of the antennae down (Microwave Landing Systems, MLS), but these have not caught on outside of military use.
Now there are good alternatives being developed. These are all based on GPS systems, with more or less advanced implementations. Read more