SPEEA begins work-to-rules on 747-8

SPEEA, the Boeing engineers union, has begun a work-to-rules effort in Wichita (KS) on the 747-8 program intended to put pressure on the company as contract talks continue, we’ve learned. SPEEA also passed out 2,000 fliers at the wide-body plant at Everett (WA) Monday night preparing the engineers there for a work-to-rules program in support of Wichita if negotiations didn’t go well.

They aren’t: SPEEA issued the following press release moments ago:

Message to SPEEA-represented employees at Wichita Boeing

Boeing reaffirms disappointing wage and benefit offer – Employment seminars planned

The Boeing Company presented a disappointing and disrespectful offer to WEU negotiators today. The offer showed virtually no movement from previous wage and benefit offers the company talked about in November.

“This is very unfortunate,” said Ray Goforth, SPEEA executive director. “The company is showing a clear lack of commitment to the future of Wichita IDS.”

The wage offer was contradicted by data recently distributed by Boeing to employees. The data, contained in a CNN news report, said engineers should receive 4.5% raise increases. The link to the article was removed from the Boeing negotiations page today after SPEEA pointed out it contradicted what the company presented during negotiations. Read the CNN article: A 3% raise this year? That’s all folks

SPEEA research shows that despite the economic downturn, the job market remains intact for experienced aerospace engineers. Spirit AeroSystems, Airbus and even Cessna are hiring engineers. Given Boeing’s apparent lack of support for Wichita engineering, SPEEA will start providing seminars to help Boeing engineers find employment elsewhere in the aerospace industry. With many employees nearing retirement age, moving to another firm can have significant financial benefits for individuals.

(More after the jump.) Read more

First meaningful 787s cancellations coming

Look for the first meaningful Boeing 787 cancellations to appear, perhaps as early as this month, due to delays and the economy.

By “meaningful” we mean more than the one from some obscure airline that has already occurred. And we are not talking about Delta/Northwest, which has been publicly hinted at by Delta.

The positions would revert to Boeing, which would not resell them but would absorb them to relieve–however slightly–the pressures on the delivery stream brought on by two years of delays.

In terms of financial impact to the 787 program, this particular cancellation isn’t all that great–after all, there are 900+ orders. But there will be a cash-cost (compensation) to Boeing, we understand, because of the delays to the customer.

KC-X procurement faces deferral

The controversial KC-X aerial tanker procurement will likely be deferred, predicts Goldman Sachs. So will several other Boeing programs, according to Goldman: the Airborne Laser, the Ground-Based MidCourse Missile Defense System and the Boeing/SAI Future Combat Systems.

Goldman made the predictions during an investor’s conference call today (Jan. 12). The company believes the incoming Obama administration will defer these and other defense programs as it adjusts priorities within the Defense Department and as part of its overall economic recovery plan.

Goldman does not predict that overall defense spending will fall; on the contrary, the firm believes that defense spending will be maintained or increased.

President-elect Obama said during the presidential campaign that the Armed Services need to be modernized and replenished after years of spending on the Iraq War, and that troops need to be redeployed to Afghanistan to continue the fight against terrorists and to get Osama Bin Laden.

The Orlando Sentinel quotes an analyst with Global Security as saying the KC-X isn’t needed at all.

Boeing groups flight testing for efficiencies, cost savings

Boeing last week (Jan. 8th) announced internally a reorganization of its flight test department across Boeing Commercial Airplanes (BCA) and Integrated Defense Systems (IDS) that consolidates all flight testing into one organization.

The move will have several benefits, according to an e-mail sent to all employees of the Flight Operations, Test and Validation employees. The reorganization will:

  • Streamline infrastructure;
  • Create economies of scale;
  • Increase visibility and cost control;
  • Create more efficient use of people, resources and assets;
  • Accelerate implementation of standard systems, processes, tools and training;
  • Bring Boeing one step closer to the goal of operating as “one company.”

Boeing hopes to reduce costs of flight testing by 10%, saving hundreds of millions of dollars annually. These costs currently represent 20%-25% of the total cost of new airplane development, Dennis O’Donoghue, vice president of the department, said in the e-mail. He will head the effort to consolidate the flight testing, which is current spread across 28 sites.

O’Donoghue wrote that full integration is hoped for by the end of the third quarter this year.

The effect, if any, on Boeing’s delayed 787 program is unclear. Flight testing is to begin perhaps as soon as late April but may be in May, June or early third quarter, depending on a wide array of variables and unknowns in the completion of airplane #1 and subsequent test planes. (More after the jump.) Read more

Airbus YE08 Conferences Tuesday, Thursday

EADS and its subsidiary Airbus will have their year-end 08 press conferences January 13 and 15 to discuss 2008 orders, events and the outlook for 2009.

This comes on the heals of a January 9 analyst report by Goldman Sachs (London) on EADS with a Sell recommendation entitled, “It’s worse than we thought.”

The gloomy report follows one in December, also a Sell rating, that Goldman today says wasn’t gloomy enough.

The Goldman analysts look at plunging worldwide airline traffic, the dismal state of affairs in China’s aviation sector and what is now at least a three year delay in the troubled A400M program, also worse than thought in the December report. (More after the jump.) Read more

New Air Force One; Boeing layoffs

Flight International reports that the Air Force issued a Request for Information (RFI) for a new Air Force One to replace the Boeing 747-200 that will be 27 years old when it’s replaced.

The USAF previously said that it is interested in a new Air Force One, and Airbus had provided information about its A380.

Boeing is determined to keep the exclusivity it’s had for the airplane since providing the very first jet AF One, a Boeing 707-120, to President Eisenhower. Later model 707s were provided up until the 747-200 entered service for President George HW Bush.

Boeing will likely offer the 747-8I, but according to Flight, the Boeing 777, the Airbus A330 and the A340 might qualify. We’d have to think that the Boeing 787 and Airbus A350 could also qualify, setting aside service entry dates, but the Secret Service is quite conservative and may not be ready to accept the new composite technology for the Commander-in-Chief. Even though the twin engine Boeing 767 had been in service for years, the Service wanted a four-engine 747 for safety when replacing the 707.

This has the potential to be another controverisal Airbus vs. Boeing competition. Although we’re only talking about two airplanes vs 179 in the KC-X tanker competition, and even though a European company won the contract to supply the next generation of White House Marine helicopters, the status symbol of flying the President of the United States around is beyond compare. Air Force One represents the United States.

Our view that the Northrop/Airbus KC-30 is better than Boeing’s KC-767 for the Air Force tanker is well known. Airbus and Boeing can debate all day long about which airplane is better, the A380 or the 747-8. Both airplanes are good, sound aircraft. In this case, as an American, we come down firmly on Boeing’s side: Airbus could pay the government to make the A380 Air Force One, but we think the president ought to fly an American aircraft and Air Force One ought to be Boeing. Airbus shouldn’t even waste its time on this one.

So there.

Layoffs at Boeing

Boeing confirmed layoffs hinted at some weeks ago in this press release. The company will lay off 4,500 of its nearly 75,000 workers.

The move is prudent, given the global economic conditions and deteriorating airline market. But SPEEA, still in contract negotiations for its Wichita (KS) unit, doesn’t think so; see SPEEA’s statement after the jump: Read more

2008 Boeing Orders: Not bad

Boeing reported its 2008 orders on January 8 and the headlines screamed that they were less than half 2007’s record number.

Well, no kidding. Nobody, including Boeing, aerospace analysts and pontificators such as ourselves, expected that Boeing would come anywhere near 2007’s level.

The 668 orders–while falling short of Airbus’ total that should be announced next week–is still nothing to sneeze at. In fact, it’s pretty darn good.

If you go back to 1988, 21 years, 2008 ranks as Boeing’s seventh best year for orders. If you go back to 1998, 11 years, 2008 ranks fourth.

Boeing’s orders were depressed by the fall-off in the 787’s recent years because of the delays and the fact that no delivery position is available until 2017 to 2020.

We think Boeing had a pretty good year nonetheless. See the statistical table after the jump. Read more

Boeing cost-cutting initiative for flight testing

Look for a major internal reorganization to be announced, perhaps as soon as tomorrow (Jan. 8), for a major cost-cutting initiative across the company to reduce flight testing costs.

Update, January 12: here it is.

2009: Recovery for Boeing, Challenges at Airbus

Update, January 10:

Bloomberg News reports EADS says it will be three years after the A400M’s first test flight–which remains unscheduled–before Airbus will ship the airplane to customers. This is hardly good news.

Original Post:

Commercial Aviation enters 2009 with a high level of uncertainty. Boeing’s headlining 787 program and the lower profile but increasingly costly 747-8 development face critical milestones this year. Airbus’ A350 does, too. The global financial market meltdown last year hopes for recovery this year but the global economy is questionable.

These are just a few of the issues facing Airbus and Boeing this year.

Boeing continues to dominate the headlines with its troubled 787 program, so we’ll look at the US aerospace company first.

Year for Recovery

This has the makings for being a year of recovery in new airplane programs. No new joint BCA-IDS program is without significant issues and two of BCA’s three new airplane projects have significant delays.

The 787 program needs little review here; its issues are well known. The question is when the first flight and flight testing will begin.

Boeing says the first flight will be in the second quarter; Air Transport World first reported that April 20 is now the schedule for first flight and Flightblogger followed with its own reporting on a timeline leading to this date. Our own checks suggest that a new development and testing timeline for the critical software systems is aimed for a sooner-than-later second quarter first flight (the old timeline suggested a June-August timeline for first flight). Our checks also report, however, that April 20 is thought to be aggressive and our sources are unsure this date can be met.

What is important to emphasize here is that this date is an internal timeline and Boeing is only saying first flight will be in the second quarter. This means it could take place on June 30 and still meet the publicly stated goal.

At long last, we expect that the first flight and the flight testing will get underway this year. These are obviously critical milestones in the recovery of the 787 program and Boeing’s operations.

Delta Air Lines may cancel the 787 ordered by Northwest Airlines now that NWA is a subsidiary of Delta. NWA ordered 18, but Delta’s CEO Richard Anderson is unhappy with the delays and performance issues (the 787 is overweight and has a shorter range than originally advertised, though the extent of the latter is in dispute). Anderson likes the 777LR and it’s possible there could be a deal for more 777LRs to replace the 787-8s ordered by NWA.

A cancellation will be nothing but a minor embarrassment for Boeing—with 900 orders, losing 18 won’t matter much and it’s possible others will come forward to grab these in any event. Read more

Gov. Boeing to Commerce?

Update, 08:15 AM PST Tuesday: Turns out Gregoire is on a sight-seeing visit to Iraq to see Washington National Guard troops. With a $6bn budget deficit in the state, we wonder how much this is costing Washington taxpayers. We also wonder why all the secrecy. After all, things are so much better in Iraq now, aren’t they?

10 PM Monday Updates at the end of this article.

With the sudden departure of Gov. Bill Richardson as Commerce nominee by President-elect Barak Obama, there is a need to move quickly for a new nominee.
A report (a rumor, really) from an alternative weekly paper in Seattle, The Stranger, suggests Gov. Christine Gregoire of Washington may be that replacement.

The intriguing report is here. An announcement of some kind is expected Tuesday morning (Jan. 6).

Gregoire just got elected to her second term, defeating for the second time former State Sen. Dino Rossi, a conservative Republican who very nearly won election in 2004 in this liberal state.

As governor, Gregoire has been a vociferous proponent for Boeing (as you would expect), supporting the $3,2bn tax breaks (which are now subject to an Airbus/EU complaint before the World Trade Organization) for enticing Boeing to build the 787 in Everett (WA). (Gregoire was state attorney general at the time.) Read more