Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- The BWB has a long way to go before flying passengers, freight May 12, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 21. May 9, 2025
- Does an A220-500 need a new wing and engines? Part 2. May 8, 2025
- Embraer downplays tariff impact on 2025 results May 6, 2025
- JetZero readies effort for private equity fund raising May 5, 2025
Further developments of the A321, Part 3
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By Bjorn Fehrm
October 12, 2023, © Leeham News: We do an article series about what can be the next development for Airbus’ most popular aircraft, the A321neo. We started with the base data last week to understand the present aircraft and its limitations.
Now, we use our Airliner Performance and Cost Model (APCM) to look at possible changes that can increase the capacity and efficiency of the aircraft and what can be achieved at a reasonable cost.
Summary:
- The capacity of the A321neo can be increased within a rather limited project.
- The more challenging part is not to lose range and field performance from the capacity increase.
Pontifications: For aviation geeks and historians; Boeing’s next airplane
By Scott Hamilton
Oct. 10, 2023, © Leeham News: For aviation geeks—and there are plenty of us—and historians, a resource that is the best single place I’ve seen is Chris Sloan’s TheAirchive.Net – The Hub of Air Transport History. Sloan—who joined LNA yesterday as a writer—started The Airchive 20 years ago. It’s a compilation of just about everything a geek or historian could imagine: timetables, route maps, brochures, information about airport terminals, cabins, cockpits and so much more.
Sloan’s data of course includes photos of airplanes, memorabilia, safety cards, boneyards, and even menus. He also has a section highlighting museums. This section includes many well-known museums and also some I’d never heard of.
Personnel changes for LNA announced
Oct. 9, 2023, © Leeham News: Leeham News announces several personnel changes today.
Bryan Corliss, who has been a Contributor to LNA for years, is leaving to become a corporate communication specialist with The Society of Professional Engineering Employees in Aerospace (SPEEA). SPEEA is the engineers and technicians union for Boeing and Spirit AeroSystems. LNA is sorry to lose Corliss’ depth of aerospace and labor knowledge. Corliss’ email with LNA will be active for a month so readers may connect with him.
Earnings season about to begin. Here’s what to watch for.
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By Scott Hamilton
Oct. 9, 2023, © Leeham News: Earnings season reporting is about to start and there are some key things to look for. The first companies, including Boeing, begin reporting the week of Oct. 23.
A few companies already raised red flags. Boeing said it will report a loss in the third quarter, which ended Sept. 30, because of problems at Spirit AeroSystem. Spirit Aero builds the entire fuselage for the Boeing 737 and the nose sections for the Boeing 787, 777, and 767/KC-46A. Spirit Aero has been plagued with quality control issues, delaying deliveries and requiring rework of planes already produced or in final assembly at Boeing.
When Spirit Aero sneezes, Boeing can catch the cold.
The aforementioned problems continue to push Spirit Aero into financial disarray. LNA has reported extensively on its financial condition and trends.
Another Spirit, the US-based ultra-low-cost airline, is also headed in the wrong direction. LNA doesn’t normally cover airline earnings—there are plenty of outlets that do—but in this case, Spirit Airlines has a major outstanding order from Airbus. Spirit Airlines is also the subject of a merger application with JetBlue, another major Airbus customer.
Spirit Airlines recently adjusted its third quarter guidance significantly downward. It now forecasts a 3Q loss margin of 14.5% to 15.5%, nearly triple the same period last year. A year ago, LNA expressed concerns over the proposed merger between JetBlue and Spirit (JetBlue was the bidding company). Our concerns have deepened. JetBlue may be well advised to exercise a clause that is presumed to be in the merger agreement: Material Adverse Change. Withdrawing from the merger may well be the best course for JetBlue. Acquiring Spirit Airlines may well be a financial black hole for JetBlue.
The supply chain remains stressed. As in the case of Spirit Aero and Boeing, if any key supplier falls down on the job, the Original Equipment Manufacturer (OEM) catches cold.
Here’s a rundown of companies to watch.
Bjorn’s Corner: New aircraft technologies. Part 33. Supply chain
By Bjorn Fehrm.
October 6, 2023, ©. Leeham News: We are discussing the Detailed design phase of an airliner development program. We have discussed program management methods, development techniques, tools for Detailed design and that the production methods today are as important as technology for achieving aircraft performance.
Another decisive part is how to involve and manage the suppliers to a project. The supply chain contributes about two-thirds of the value of an aircraft. Methods and tools to control this part of the project are therefore critical for the program.
Figure 1. The development plan for a new airliner. Source: Leeham Co.
Further developments of the A321, Part 2
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By Bjorn Fehrm
October 5, 2023, © Leeham News: We look at what can be the next development for Airbus’ most popular aircraft, the A321neo. We looked at the history of the A320/A321 last week and how the aircraft progressively were updated to take more passengers and fly longer sectors.
The series represents more than 50% of the revenue and margin for Airbus. With the latest development, the A321XLR, soon finished, what is next? We use our Airliner Performance and Cost Model (APCM) to look at base data and what changes are necessary to increase capacity and efficiency further.
A321XLR during cold weather testing in Canada. Source: Airbus.
Summary:
- The A321 is reaching its weight and capacity limits.
- There are ways to lift these limits, but the changes must not break its Airport gate classification.
Risk Adjusted Business: Aircraft and leasing values
By William Loh, International Aviation Advisors and
Dr. David Yu, CFA, Senior ISTAT Appraiser, AAVA Group, NYU Shanghai and Stern
Special to Leeham News
Oct. 3, 2023, © Leeham News: Investing in aircraft has become increasingly popular over many decades now, and for good reason. The returns can be most attractive and well-chosen assets tend to hold their value well over the medium term. Some of them have the option to extend the useful life out to 40 years or more in a freighter conversion.
As with most investments though, owning aircraft involves risk and requires subject matter expertise to avoid surprises and pitfalls. Some of this will involve aircraft selection, understanding industry dynamics, and incorporating these into the modeling of future values/lease rates and equity returns, which have been a focus of ours for several years.
Rather than the traditional method of producing bi-annual static forecasts of future values, our approach has been to develop a simulation model of possible future outcomes. This results in a market-driven probability distribution of the future asset value, rather than a single point forecast (rarely achieved in practice). Most traditional forecasts are discrete points including the classic high/low/base versions. Our forecasts are updated whenever it is appropriate based on market changes.
Analysis: With Gentile out at Spirit, here’s what Shanahan’s hiring likely means
By Bryan Corliss
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Oct. 2, 2023, © Leeham News – Tom Gentile is out as CEO of Spirit AeroSystems, the victim of a number of serious production missteps and a failure to lead the Tier 1 supplier into a stronger position following the Covid-19 pandemic and the grounding of Boeing’s 737 MAX.
Interim Spirit AeroSystems CEO Pat Shanahan.
The new interim CEO is Pat Shanahan, a long-time Boeing and Pentagon executive who has been serving on Spirit’s board since 2021.
Spirit said its board is conducting a search for a new chief executive.
- Markets respond to news
- Shanahan faces huge challenges as CEO
- Shanahan’s resume fits Spirit’s need
- Our takeaway: What this means for Spirit’s future
Related Article:
Mammoth quietly drops trade secrets theft lawsuit
By the Leeham News Team
Oct. 2, 2023, © Leeham News: Mammoth Conversions quietly dropped its long-running trade secrets lawsuit against Sequoia Conversions, a competitor, for alleged trade secrets theft.
Mammoth and Sequoia settled and dropped the lawsuit, with each side paying its own costs, on Sept. 8. The case was filed in the US District Court in Southern California. Sequoia’s David and Wayne Dotzenroth were also defendants. The action against them also was dropped. The case was scheduled to go to trial in January.
Mammoth previously dropped its lawsuit against the University of Wichita’s NIAR engineering center and Split Rock Aviation, a consulting firm working with Sequoia. Each side bore its costs in these dismissals.
Analysis: Boeing’s options for Spirit AeroSystem
Breaking News: Tom Gentile, the CEO of Spirit, is out. He’s been replaced by Pat Shanahan, a Spirit Board member, on an interim basis while the search for a permanent CEO is underway. Shanahan is a former Boeing executive and former deputy secretary of the US Department of Defense. This story will be updated.
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By the Leeham News Team
Oct. 2, 2023, © Leeham News: Boeing is in another bad spot with a major contractor and the depth of the problems is quickly becoming apparent. Spirit AeroSystems in Wichita has been seriously underperforming with inspection escape after inspection escape seriously hampering Boeing’s ramp-up of the 737 rate.
Spirit isn’t making money on Boeing 737s and 787s. Boeing is charging Spirit for rework, and a glance through Spirit’s second-quarter earnings report was full of items where they did not have a firm handle on their losses and future exposures attributable to operations with Boeing.
Spirit’s repeated quality and production problems led to speculation that Boeing might buy Spirit, to bring direct control over the Wichita (KS) plant back in-house. Spirit was once “Boeing Wichita.” It was sold on orders of then-Boeing CEO Harry Stonecipher. The resulting spin-off, Spirit, remained Boeing’s supplier for all the commercial airplanes then in production. Nose sections were supplied for all but the 737. Spirit produced the entire 737 fuselage and does to this day. Boeing has a workforce in place at Spirit to help sort out the problems.
At the Paris Air Show, Boeing shot down the speculation, saying purchasing Spirit wasn’t going to happen. Since then, more quality control and production issues emerged on the 737. Two-thirds of the 737s in inventory and an unknown of aircraft in service or new production models are affected.
Speculation over the possibility of Boeing purchasing Spirit continued. Doing so would not be simple, even if Boeing was so inclined.
LNA takes a deep dive into the issues.