Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Airbus 1Q2025 results: So far, so good, but US tariffs make future results unpredictable May 1, 2025
- Does an Airbus A220-500 need a new wing and engines? May 1, 2025
- Teamsters, Boeing have a new contract April 29, 2025
- Boeing wants to remarket China’s airplanes. It’s costly and time consuming. April 28, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 19. April 25, 2025
Odds and Ends: A350 business case, Ryanair, Boeing and more
Airbus A350: Aspire Aviation in Hong Kong has a lengthy look at the Airbus A350 program.
Airbus launch aid: Airbus says it has complied with the findings of the World Trade Organization and cured those elements found to be illegal. It calls on Boeing to do the same. (The case against Boeing is under appeal.) Update: and the war of words continues. Here is Boeing’s response.
Boeing and IAM 751: Reaction to the agreement reached between Boeing and IAM to extend a new contract to 2016, settle the NLRB complaint and put the 737 MAX assembly in Seattle is winning accolades from everybody except some Republicans who was pissed they won’t have an election campaign issue to talk about next year. Never mind what’s good for Boeing.
Plane Talking, the entertaining if somewhat cranky blog from Down Under, has this piece about Ryanair’s Michael O’Leary opining on this and that.
Speaking of Ryanair: Heard in the hallway at the Credit Suisse conference: O’Leary is already circling over the American Airlines bankruptcy, looking to pick up 737-800s cheap if American doesn’t keep payments up and any are repossesed.
Thoughts on the Boeing-IAM deal
We couldn’t be more delighted.
The agreement announced Nov. 30 between the IAM 751 local and Boeing is an outstanding development.
Who wins? Basically, everybody.
The Company gets:
- Production stability through most of 2016 without the pain and agony of protracted negotiations and all the uncertainty associated with this process;
- No-strike through most of 2016;
- The NLRB case goes away., by all indications. How this specifically relates to Charleston and the Surge Line remains to be seen;
- A contented workforce; and
- Stability for ramping up production of all the 7-Series, most particularly the 737.
The union gets:
- The 737 MAX;
- More work on the KC-46A tanker if Boeing Wichita closes;
- An economic package with no apparent “take-aways;” and
- No stress over contract negotiations or a strike.
Customers get:
- No strike;
- No interruption of deliveries; and
- Certainty over deliveries.
Suppliers get:
- Pretty much the same thing as customers.
Washington State gets:
- The 737 MAX and all the jobs and supply chain benefits there from.
Losers:
- Everybody else who salivated over the prospect of winning the 737 MAX, but more or less you don’t miss what you don’t have; and
- Airbus: it can ‘t play on the uncertainty of a Boeing strike and delivery reliability.
We’re delighted management and labor set aside the antagonism of the decade-and-a-half and all the testosterone that went with it and realized that a partnership is more beneficial than being in their corners ready to fight.
A note of interest: Boeing Commercial Airplanes CEO Jim Albaugh was asked at the Credit Suisse conference Wednesday morning about the prospect of labor negotiations next year. (This during the 8am hour, EST.) Albaugh, in his characteristic understated way merely opined he was optimistic a successful negotiation could be achieved.
Six hours later, the deal was announced.
American bankruptcy may prompt US Airways bid
American Airlines’ bankruptcy filing may at long last prompt a bid by US Airways to make a bid for the carrier.
Doug Parker, CEO of US Airways, has a long history of bidding for Chapter 11 carriers. He was successful when, as America West Airlines, he bid for US Airways. He was unsuccessful as US Airways in bidding for United Airlines and Delta Air Lines. He is on record as saying a bid for American made no sense without a bankruptcy by the Ft. Worth (TX)-based carrier.
We won’t be surprised in the slightest if Parker makes a bid
Boeing, IAM 751 reach labor agreement, settles NLRB case, MAX stays in Seattle
IAM press conference 11am PST. Live video KIROTV.com.
China won’t be competitor for 20 years: Leahy
China’s emerging commercial aerospace industry won’t be a viable competitor to Airbus and Boeing for 20 years, predicts John Leahy, COO Customers of Airbus.
Speaking at the Credit Suisse Aerospace conference in New York, Leahy noted the challenges COMAC has with the ARJ21 regional jet; and the development of the C919 mainline aircraft, neither will commercially be an effective aircraft compared with today’s aircraft from Western companies.
Boeing’s Jim Albaugh, CEO of Commercial Airplanes, speaking separately at the same event, agreed. He also said Boeing has erected “high walls” around its technology, and will maintain its lead over China by building “tomorrow’s airplane” while China is building “today’s airplane.”
Albaugh acknowledged there is some technology transfer of today’s generation.
Boeing looks at improving 737 production rate efficiency
Boeing is considering how to make the already-lean 737 production line even more efficient with an eye toward increasing rates beyond 42 per month, the commercial airplane division CEO said today.
Jim Albaugh, speaking at the annual Credit Suisse Aerospace conference, said the demand is here for a higher rate.
“We went into this year wanting to reduce the backlog and we failed miserably,” he said, referring to record orders and commitments for the 737NG and 737 MAX.
The challenge of going higher is that the Renton 737 plant is nearing capacity. A solution may be to further increase efficiency of the facility.
“If you go back two years with the 777 program, the maximum rate we had was seven per month in the factory. With lean manufacturing and engineering, we were able to take that up to 8.3 per month with very insignificant investment. It is my hope that as we continue to lean-out the 737 program, we could be in a similar position where we can go even higher than 42 if we chose to,” Albaugh said.
“We don’t have to make a decision on going higher than 42 for a while. We’re going to go to 42 in 2013. We’ll look at the market, we’ll look at the demand…and probably in late 2012, late 2013, if we can go higher we’ll make that decision.
“The other thing that we have to do is really think about how we transition from the 737NG to the 737 MAX. Regardless as to where we are going to build the 737 MAX, you don’t want to get into a situation where we aren’t delivering narrowbodies. We have to build a bridge to the 737 MAX.”
The 42 rate is sustainable, Albaugh said. “As we look at the skyline, the demand is there. We’re basically sold out through 2015. We can sustain them.”
Where will MAX be built?
“We are looking at quite a number of things. We’re taking a long-term view of what makes sense. How complicated can we be. The business climate. The environment. The assurity of delivery. We’ll make a decision when we have the facts.”
Odds and Ends: Wait a minute, we’re No. 2
We’re at the Credit Suisse aerospace conference in New York. Occupy Wall Street is demonstrating outside and passed out a flier criticizing defense spending. Boeing is listed as the number 5 defense contractor.
Jim Albaugh, CEO of Boeing Commercial Aircraft, looked at the flier and with his ever-present sense of humor said, “That’s wrong. We’re number 2. Take this out and have them retract this.”
Stay tuned for updates throughout the day.
American, parent, subs file Chapter 11
It’s done: American is the last legacy carrier to file for bankruptcy. Press releases here, here and here.
Our discussion last week of what a bankruptcy would mean to orders is here.
787: Breaking Even, Operating Costs and Worldwide tour
The Everett Herald Nov. 27 had an interesting article assessing the break-even of the Boeing 787. The article neatly summarizes what Boeing CFO James Bell described on the 3Q earnings call. The Herald’s article is slightly out of date, not accounting for the cancellation of 24 airplanes by China Eastern and dropping the firm orders to just under 800.
Graphic (would not load in our Firefox but did load in Chrome).
Separately, the company that created PIANO–the cost-analysis tool to determine aircraft operating costs–published an assessment of the 787’s operating costs and related CO2 emissions reduction. The results were surprising.
Boeing found a way to utilize one of the first three test airplanes longer-term. These airplanes won’t be sold and have been written off. The company took #3, painted it up in the Boeing colors, outfitted it with the full interior and embarked on a world tour as a marketing and sales tool. It’s a highly creative solution to what to do with the test airplane now that testing is over. It’s only a six month tour but it’s a good move.