Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
- Focus on quality not slowing innovation, says GKN April 18, 2024
- Boeing defends 787, 777 against whistleblower charges April 17, 2024
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
- Bjorn’s Corner: New engine development. Part 3. Propulsive efficiency April 12, 2024
Embraer delays KC-390 one year in 2Q2015 earnings announcement
July 30, 2015: Embraer reset entry into service for its KC-390 tanker/transport will be in 2018 vs 2017 when it reported its 2Q2015 earnings today.
The press release is here.
The KC-390 is Embraer’s largest aircraft, with a fuselage the size of a Boeing 767 width and the length of a Boeing 737. The airplane is being developed with government backing, intended to serve the remote regions of Brazil. Embraer also plans to market the airplane for export. Government funding has been squeezed with Brazil’s latest economic decline. Embraer has $390m in accounts receivable from the government.
The financial numbers were somewhat mixed, with a decline in revenue forecast for its defense unit, lower EBIT margins but solid commercial aircraft backlogs.
Embraer’s revised guidance is here. EMB’s 2Q2015 earnings presentation is here: EMBRAER_2Q15_Results
Goldman Sachs has this initial reaction:
Bombardier reports lower 2Q2015 income
July 30, 2015: Bombardier reported lower net income on slightly higher revenues for the second quarter.
The press release is here. The earnings call presentation is here. Bombardier-Q2-2015-Presentation-20150730-en
“Overall, the second quarter was in line with plan in terms of revenues, EBIT and deliveries, and our liquidity stands at $4.4 billion,” said Alain Bellemare, President 
and Chief Executive Officer. “After five months on the job, I have a better understanding of our challenges and opportunities. We are taking specific action, including the launch of our Bombardier transformation plan, a disciplined approach to cash management, and the strengthening of our leadership team to reshape the company and ensure our long-term success.”
Bombardier said it completed 2,000 of the 2,400 hours required for certification of the C Series, which will be delivered during the first half of 2016 to launch operator Swiss International.
During the earnings call, Bellemare outlined more details of the Transformation Plan designed to turn BBD around from its financial strains.
MH370: Caution, no quick resolution
July 29, 2015: By now the world knows a piece of an airplane wing consistent with a Boeing 777 has been found on an island near Africa, thousands of miles from the search areas of the West Coast of Australia.
As this is written, while news reports indicate Boeing says that from photos the part appears consistent with a 777 wing part (and, of course, Malaysia Airlines flight MH370 is the only missing 777), confirmation hasn’t been achieved.
Even if this part proves to be from the missing 777, don’t expect any resolution soon.
Computers may be able to calculate ocean currents, time and distances to trace back a reasonable point of origin–if possible, this will take time–and then deep sea searching must start all over again.
Caution should be exercised over this discovery. No quick resolution is going to be forthcoming if this part is from the missing airliner.
This mystery is far from over.
Spirit Aerosystems: Higher profits on lower revenue
July 29, 2015: Spirit Aerosystems, whose principal business is a major OEM supplier to Boeing but which also makes fuselage panels for the Airbus A350, reported 
lower revenues but higher profits for the FY2Q2015.
The press release is here.
Revenues were down because the company sold its Gulfstream wing sector and lower revenues were recognized from the Boeing 787 program.
“Preparing for aircraft rate increases is a key focus for us this year. Near term, we are capitalizing to increase the production rate of the 787 to 12 shipsets per month and the 737 to 47 shipsets per month, as well as the higher production rates on the A320 and A350 programs,” said Larry Lawson, CEO.
Wells Fargo has this initial reaction:
Triumph Group disappoints, cites decreased aircraft production
July 29, 2015: Triumph Group reported lower FY1Q2016 earnings below analyst expectations, citing in part decreased production of the commercial Airbus A330
program as well as lower production of the Gulfstream G450/550 and Boeing C-17 and 747-8 airplanes. It’s previously taken large write-offs of the Boeing 747-8 program on its poor sales.
Triumph said in its press release:
The Aerostructures segment reported net sales of $611.8 million in the first quarter of fiscal year 2016 compared to $612.2 million in the prior fiscal year period. Organic sales for the quarter declined fourteen percent primarily due to decreased production on the C-17, 747-8, A330 and G450/G550 programs. Operating income for the first quarter of fiscal year 2016 was $66.0 million, compared to operating income of $68.8 million for the prior year period and included $1.9 million of pre-tax costs related to initial facility consolidation actions. The segment’s operating results for the quarter included a net favorable cumulative catch-up adjustment on long-term contracts of $1.3 million. The segment’s operating margin for the quarter was eleven percent. Excluding the 747-8 program, the segment’s operating margin for the quarter was thirteen percent.
Triumph’s Top 10 programs are mostly Airbus and Boeing commercial airplanes. Boeing makes up more than 10% of Triumph’s 1Q revenue. The earnings call presentation is here. Slide 15 outlines the Top 10 programs.
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Introduction
July 28, 2015: © Leeham Co. Trying to decipher what the airframe Original Equipment Manufacturers (OEMs) are going to do is a sporty game that is often analogous to Kremlin watching, especially when it comes to Airbus and Boeing.
The OEMs are naturally circumspect about most everything they do: product development, aircraft pricing, sales campaigns, etc.
They also often are like lawyers when it comes to promoting their products in the public domain: cherry-pick the data that supports your product and which puts your competitor’s product in the worst possible light.
Aerospace analysts, consultants and media (as well as the enthusiast) look anywhere and everywhere for information to discern what the OEMs are up to or how the airplanes are performing or whatever the soup de jour is.
There is more information in the public domain than you would think.
Rockwell Collins sector sales below expectations because Boeing 787 doing so well
June 28, 2015: Rockwell Collins, a major supplier of aircraft systems, said in its FY3Q2015 earnings call Friday that aftermarket parts and provisioning sales were
Fewer airlines introduced the 787 into service in the third quarter, also driving down provisioning, Rockwell said.
Although Rockwell’s emphasis was on its own products, the news from a third party such as Rockwell must be sweet music to Boeing’s ears after all the program difficulties and a three-and-a-half month grounding of the 50 787s then in service beginning in January 2013 after two battery fire and smoke incidents. It is, after all, Boeing’s name on the side of the airplane, not Rockwell’s. There are now about 300 787s in service.
Options for Singapore Airlines to operate direct flights to the US, part 3.
By Bjorn Fehrm
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July 22, 2015 © Leeham Co. We will now finish our series around Singapore Airlines (SQ) need for an Ultra Long Haul (ULH) airliner by looking at what would be the technology and performance of the A350R that Airbus talked about as a possible future model at the launch of A350XWB in 2007.
The A350R as presented was quite different to the A350-900LR that we presented in the first analysis articles. Whereas the A350-900LR is essentially a new Weight Variant (VW) the A350R was an aircraft combining the wing, engines and main landing gear from A350-1000 with the fuselage of A350-900 to create an Ultra Long Haul aircraft (and a freighter variant).
Such an A350 variant could be an interesting aircraft for Singapore or other airlines with a need for a ULH aircraft. We will use our proprietary aircraft model to create the A350R and check its performance against the A350-900LR and Boeing’s 777-8X. This will give an understanding if it could be worth the development effort for Airbus.
Summary:
- A350R would have very high range and payload weight performance.
- It would be a true ULH aircraft with which Airbus could pick a fight with Boeing’s 777-8X on the routes that requires an ULH.
- Its capacity would be volume constrained on a lower level than the 777-8X with better economics per seat and aircraft mile.
- The question remains, given its lower seat count, would it find a market besides the -8X?
Pontifications: Steady as she goes at Boeing–for now
By Scott Hamilton
July 27, 2015, © Leeham Co. Dennis Muilenburg, who became the chief executive officer at The Boeing Co. the Tuesday after the Paris Air Show ended (and at which Jim McNerney was front-and-center in his role as CEO), was on the company earnings call for the first time in this role last Wednesday.
If anyone was expecting, or hoping for, dramatic announcements or policy changes, they were disappointed.
With this Muilenburg’s first earning call, it was McNerney’s last. Predictably, it was a love fest between the out-going and the incoming. Muilenburg and McNerney swooned over how well they worked together and praised each other’s work, accomplishments and vision. The discussion wouldn’t be any other way, absent a scandal of some kind (remember Phil Condit resigning over the air force tanker lease deal, Harry Stonecipher over zippergate). Despite the buzz on Wall Street and elsewhere of the relationship strains between the two men, those days really don’t matter now. What does matter is what comes next under Muilenburg.
Qantas 32: cockpit resource management at work
July 25, 2015: This is a 45 minute Air Crash Investigation episode about the Qantas Airway Flight 32 Airbus A380 engine failure and the subsequent events. Aside from the interesting circumstances, this demonstrates Cockpit Resource Management. What especially caught our eye was at the end, when the Captain made comment of automation vs human crews. With discussion from time-to-time about having one pilot, no pilots or someone on the ground controlling the airplane (as with a drone), this is why we like having real people in the cockpit. Qantas 32 is a good example of of how pilots on the scene vs human monitoring on the ground is the much better way.
https://youtu.be/vbDqpD80_u0