Leeham News and Analysis
There's more to real news than a news release.
Critical labor contract vote for Boeing, IAM 751 today
By Karl Sinclair and Scott Hamilton
Sept. 12, 2024, © Leeham News: The International Association of Machinists (IAM) District 571 votes today on a contract proposal negotiated between union leadership and the management at Boeing (BA). It’s a critical vote for both parties.
The four-year contract calls for a 25% pay hike, a $3,000 signing bonus, an improved benefits package, and a commitment to build any future new aircraft in the Seattle area during the next four years.
Boeing yesterday issued a new Contract comparison sheet in advance of today’s vote: Boeing Contract Comparison_Fact_Sheet 9-11-24
Union workers can reject the offer, which must be approved with a 50%+1 majority. A second vote on a motion for strike action if the contract is turned down will also be on today’s ballot. A strike vote must be approved by a two-thirds majority. If this fails, the contract becomes adopted irrespective of the accept-or-reject vote. Boeing is desperate to avoid a shutdown as it faces pressure from customers, regulators, and suppliers who have endured one of the worst stretches in its history.
On Wednesday morning, hundreds of workers walked out of the Everett factory to rally against the contract. Engineers at the Renton factory were sent home because demonstrations there made it too noisy to work. They were told to work from home today,.
Leadership at the local previously indicated that they intended to demand a 40% raise for members, along with a seat on the board of directors, having gone through 16 years of giving concessions to management, as they were strong-armed in previous negotiations. Read more
The A330neo for medium haul or twice the frequency with A321XLR? Part 2
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By Bjorn Fehrm
September 12, 2024, © Leeham News: We examine the high-volume short-to-medium-range market and check whether a route previously reserved for the Airbus A330neo can be flown with a fleet of A321XLRs. At equal per-passenger operational costs, doubling the frequency is advantageous and can drive market growth, revenue, and margin.
After comparing the aircraft and their seating, we now use our Airliner Performance and Cost Model (APCM) to fly them on a Southeast Asia route and compare the operating costs.
Summary:
- The A321XLR is competitive on fuel costs but loses out on Cash costs as several cost factors don’t scale linearly with passenger capacity.
- The cost disadvantage doesn’t render the A321XLR a non-replacement for an A330-900; it just needs a positive revenue uptick from the frequency increase to be an interesting alternative.
“Hyper focus on reliability and durability out of the gates”
By Scott Hamilton
THE CFM Open Fan engine could be at least 20% more fuel efficient than today’s CFM LEAP and P&W GTF, CFM partners say. Credit: CFM.
Sept. 11, 2024, © Leeham News: GE Aerospace and Safran advance on the CFM RISE Open Fan engine with an overriding goal: “Our customers really want us to be hyper-focused on reliability and durability out of the gates.”
GE and Safran are developing a potentially game-changing engine and marketing it via the 50-50 joint venture, CFM International. The entry-into-service goal is 2035.
Customer demand for reliability and durability “out of the gates” is understandable. Engines produced by CFM, Pratt & Whitney and Rolls-Royce disappointed Airbus and Boeing customers operating the Airbus A320neo family, the Boeing 737 MAX and 787 and now the Airbus A350. Durability and/or technical issues plagued the CFM LEAP, Pratt & Whitney Geared Turbo Fan (GTF), Rolls-Royce Trent 1000 and now the RR Trent XWB-97. The giant GE9X engines on the Boeing 777X also suffered technical problems during the long, extended flight testing.
Operators protested as on-wing time fell short of promises. 787s, A220s, A320neos, and to a lesser extent Embraer E195-E2s were grounded as engines components failed, MRO shops backed up (displacing routine overhaul requirements on older engines) and new-production engines were diverted to replace those on grounded aircraft.
The CFM LEAP, GE and Safran promise, will provide a 20% reduction in fuel consumption and emissions. But the radical technology of an Open Fan gives airlines, lessors and even Boeing pause.
GE and Safran say they are progressing through development of the 35,000+ lb thrust engine but there is a lot of work to do to make it ready for service and give customers confidence.
A320neo replacements needs to be ~25% more efficient
By Scott Hamilton
Sept. 11, 2024, © Leeham News: The replacement for the Airbus A320neo family should be 25% more efficient, says CEO Guillaume Faury.
“The priority for the next generation of single line, the one that will replace the very successful A320 family, will be to reduce the fuel burn by around 25%,” he said. Further reduction in carbon emissions has to come from the use of decarbonized fuel. This is primarily sustainable aviation fuel. “This is something we’re going to achieve working on the propulsion system,” he said.
Faury made his remarks during the annual US Chamber of Commerce Aviation Summit in Washington (DC).
Faury said that the CFM RISE Open Fan engine appears, so far, to be the best hope for a new engine. “It’s been very interesting to see the RISE engine as a successor of the LEAP to continue to improve fuel efficiency. Part will come from the propulsion system, as usual, and a large part will come as well from the plane itself.”
Boeing IAM vote in 2 days; approval a hard sell
By the Leeham News Team
Sept. 10, 2024, © Leeham News: Boeing’s touch labor union, the International Association of Machinists and Aerospace workers District 751 (IAM) votes in two days on a new labor contract.
Although a Tentative Agreement was reached Sunday and union leadership endorsed it, getting 50%+1 vote to ratify the contract appears in trouble. A concurrent strike vote requires a two-thirds majority for a walk out, and there is split opinion whether this high threshold can be met.
This will be a hard sell for IAM leadership. The deal makes progress in the areas IAM members identified as priorities, but falls short of the union’s stated goals in most of them:
Union scourge Frank Lorenzo at last tells his story in “Flying for Peanuts”
By Scott Hamilton
Sept. 10, 2024, © Leeham News: Thursday is the day the touch-labor union at Boeing, the IAM 751, will vote on a new contract. The militant union is loaded for bear. Members are voting on a new contract for the first time in more than a decade, and the first entirely refreshed contract in nearly two decades.
They want big raises, saying theirs have stagnated since the 2008 contract and two subsequent revisions in 2011 and 2014. The IAM wants a 40% wage hike over a three-year contract. Recapture of benefits concessions also are being sought. A guarantee that the next Boeing airplane will be built in Puget Sound, a seat on the Board of Directors, and a role in fixing Boeing’s safety culture are all on the table.
The IAM 751 advised its members to start saving for a strike fund as far back as 2019. Training has been underway for weeks for picketing. Members held a rally with 25,000 attendees; 99% voted in favor of a strike if an acceptable contract wasn’t reached.
Frank Lorenzo, left, and Donald Trump, during the former’s courtship to entice Trump to buy the famed Eastern Shuttle. Source: Frank Lorenzo.
Against this backdrop, it is somehow fitting that the memoirs of one of labor’s most reviled enemies comes out today: Frank Lorenzo’s Flying With Peanuts is now available via Amazon, Barnes and Noble, and elsewhere. Subtitled Tough Deals, Steep Bargains and Revolution in the Skies, Lorenzo for the first time details his life and his career from his immigrant Spanish parents through the highly controversial career owning Texas International Airlines, Continental Airlines, Eastern Airlines, and purchasing the original Frontier Airlines, PeoplExpress and several commuter carriers; and launching non-union New York Air in one of America’s most unionized cities.
Slow production ramp up, international sanctions slow C919 progress
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By Karl Sinclair
Sept. 9, 2024, © Leeham News: China isn’t getting into the commercial aviation industry to let Airbus and Boeing supply three quarters of the market, says a consultant. The long-term outlook for the Big Two aircraft producers may be considerably more bearish than many think.
He made the following comments when asked about the new Boeing (BA) projections for the aircraft market in China, “COMAC wants to hit 150 (deliveries) in the next five years. That means that one-fourth of that China demand goes to COMAC,” said Brian Langenberg, principal and industrial strategist of Langenberg and Co. “If you believe that China got into the commercial aviation industry to let Boeing and Airbus make three-fourths of their narrow bodies aircraft,” he says people underestimate the determination of the Chinese government.
COMAC C919. Source: Leeham News.
The C919 is COMAC’s latest narrow-body jet, which began commercial service at China Eastern Airlines (CEA) in 2023. Since then, eight more have been delivered to CEA, Air China, and China Southern as COMAC slowly ramps up production. COMAC has more than 1,000 orders for the type, with the vast majority coming from airlines and lessors in China, although AerCap of Ireland has orders for 20.
COMAC’s production goals are aggressive. LNA believes the learning curve will take longer than production managers suggest. International certification by European and US regulators is also important to China and mandatory for export sales.
Related Article
China still needs Boeing to fill demand
Boeing, IAM reach tentative agreement on new contract
By Scott Hamilton
- IAM 751 and Boeing reach a four year contract agreement. The IAM summary is here.
- Additional contract news from the IAM is here.
- The Boeing fact sheet is here: Boeing fact sheet IAM 751 W24 TA highlights-090824a
Boeing CEO Kelly Ortberg. Photo source: Boeing. The new contract agreement between Boeing and the IAM 751 avoids a strike and potentially marks a new era of labor relations between the two.
Sept. 8, 2024, © Leeham News: In a development that is contrary to all expectations, The Boeing Co. and the IAM 751 labor union reached a tentative agreement this morning on a new four-year contract.
IAM members, who assemble Boeing’s airplanes in the great Seattle area, get a 25% raise over the life of the contract; the union asked for 40%. The value goes up to 33% in “wage growth” when the wage increases, and “progression” are calculated. Certain pay grades did get a 42.3% increase, the IAM said.
There is a lump sum payment of $3,000 and Boeing’s 401(k) contribution increases up to $4,160 per employee per year. The union asked for a return to a defined benefit plan, which was probably a non-starter. Lower costs for medical care were agreed.
Boeing committed to build the next new airplane in the Seattle area. A Boeing spokesperson did not have details whether this would be in Renton, where 737s are built, or Everett, where widebody aircraft are currently assembled. Boeing also committed to keep the current 737, 767 and 777X production in Puget Sound.
The union also wanted a seat on the Boeing Board of Directors. Neither side referred to the seat in their information released today, so it appears this may not have been agreed. The Boeing spokesperson had no information on this and the IAM wasn’t immediately available to comment.
The IAM leadership unanimously recommends approval of the contract. The vote is set for this Thursday.
Bjorn’s Corner: New engine development. Part 23. Development risks.
By Bjorn Fehrm
September 30, 2024, ©. Leeham News: We do an article series about engine development and why it has longer timelines than airframe development. It also carries larger risks of product maturity problems when it enters service than the airframe of an airliner.
We have covered the parts of an engine that involve challenging technology and which decide its reliability (dispatch consistency) and durability (time on wing). Now, we discuss why modern engine design is more challenging regarding these parameters than airframe design.
Figure 1. The Pratt & Whitney GTF in cross-section, one of the new engines. Source: Pratt & Whitney.
If a strike occurs, here’s what Boeing can do
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- Contingency plan for 4-12 week strike.
By the Leeham News Team
Analysis
Sept. 5, 2024, © Leeham News: There seems to be quite an expectation that there will be a strike by Boeing’s touch labor union, the IAM walkout at Boeing this contract cycle. The costs associated with a strike are well understood. Crippled cash flow, upset customers, and stock price losses not counting the damage to the companies in Puget Sound that built much of their business models on Boeing worker’s paychecks. It’s never a good thing to sustain a strike of any duration because the disruptive effects can last for years.
The last time the IAM struck was in 2008, for 57 days. The strike cost Boeing billions of dollars in lost revenue, much of which was made up in the following years. The ill-will generated by the strike affected customers. Management-labor relations remain strained to this day. Union leadership is determined to recover previous givebacks in wages and benefits. They want a seat on the Board of Directors, a role in improving Boeing’s safety culture, and a guarantee that the next airplane will be assembled in Puget Sound.
Talks remain far apart, according to the union. Boeing says progress is being made. A strike seems likely at this stage.
Boeing is clear about a strike potential. In a message last week to employees, Boeing said:
Does Boeing want a strike so it can stabilize production or allow time for the supply chain to recover?
Absolutely not. Any work stoppage, whether days, weeks or months, would disrupt our production system, supply chain and most importantly, our customers. When Boeing cannot deliver airplanes as scheduled, customers question our reliability. A strike would only help the competition and hurt our suppliers.
What is Boeing supposed to do if the IAM walks out? The usual answer is sweeping and cleaning and trying to deliver whatever you can sneak out the door to keep the money coming in. It is never a very effective way to operate.
Here are some points to ponder if the strike occurs and Boeing production shuts down.