Leeham News and Analysis
There's more to real news than a news release.
Pontifications: “We’re sick and tired of new technologies:” Avolon CEO
By Scott Hamilton
Editor’s Note: As Airbus and Boeing consider new airplanes, their current generation aircraft are plagued with technical issues. The engines on the A320neo and 737 MAX families continue to have problems years after entry into service. The Boeing 787, which had ground-breaking technology when it was designed, has production issues. Flight testing early on revealed technical problems with the engine on the 777X, prompting the president of Emirates Airline to publicly suggest he won’t accept delivery until the engines are fully “mature.”
Aviation Week’s Check 6 podcast last week examined Boeing’s path toward a new airplane. Boeing CEO David Calhoun insists on waiting for new technology. But “new technology,” while in theory is a great idea, the phrase also scares people. LNA reported on this in March 2020. We’re reposting this article from then.
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Introduction
By Scott Hamilton
March 16, 2020, © Leeham News: “I can tell you from our perspective, we’re kind of sick and tired of new, new technology. It’s not proven to be the home run.”
This blunt assessment comes from the chief executive officer of the big aircraft lessor, Avolon.
Domhnal Slattery
Domhnal Slattery, the CEO, was giving his critique of whether Boeing should launch a new airplane once the 737 MAX crisis is over. (Update: Since this interview, Slattery retired from Avolon.)
Boeing was on a path to decide whether to launch the New Midmarket Airplane when the MAX was grounded one year ago this month.
Airbus was waiting for Boeing to move before deciding how to respond.
Summary
- Airbus and Boeing should “stick to their knitting.”
- Focus on incremental improvements for now.
- 2030s to 2050s will be the next big advance in technologies.
eVTOL operator profitability: an elusive dream?
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By Judson Rollins
Sept. 25, 2023, © Leeham News: As the hype grows around electric-powered short-haul air mobility, questions linger around the industry’s ability to be profitable without government subsidy.
LNA’s Bjorn Fehrm has written extensively on the cost hurdles facing eVTOL operators. His analysis predicted operating costs of approximately $2.14 per seat-mile, significantly higher than startup Lilium’s 2021 estimate of $1.75. But even the latter is a high bar to clear, as this article will show.
Source: Lilium.
Other startups have been pitching business plans with even lower unit costs. But, as aviation consultant Kevin Michaels pointed out last year, such plans often rely on impossibly high assumptions of load factors and/or utilization.
For instance, Lilium’s cost projections are predicated on 10 hours of average daily utilization. By comparison, US DOT data from 2019 show turboprop utilization averages 7.3 hours, small regional jets average 6.2 hours, and large regional jets average 9.4 hours.
Summary
- Helicopter services demonstrate the difficulty of making urban air mobility profitable.
- Comparing eVTOL costs to potential revenue highlights a lack of markets.
- Market forces will allocate scarce pilots to where they generate the most revenue.
Bjorn’s Corner: New aircraft technologies. Part 31. Detailed design -3
By Bjorn Fehrm
September 22, 2023, ©. Leeham News: Last week, we discussed program management methods for the Detailed design phase of an airliner development program. While the modern Agile work methods suit smaller projects, the sheer size and complexity of an airliner project that involves hundreds of companies require more structured management methods with Agile used for areas where it’s suitable.
We now go a step deeper than program and configuration management and look at development techniques and tools for Detailed design.
Figure 1. The development plan for a new airliner. Source: Leeham Co.
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The Airliner Production Problem, Part 2
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By Bjorn Fehrm
September 19, 2023, © Leeham News: The Airliner OEMs can’t increase their production rates as planned after the pandemic, and it’s become clear it’s not a short-term problem. We started looking at the root causes of the difficulties last week.
We looked at the complex puzzle the production of a modern airliner is and the importance of the learning curve for the result. Now, we analyze the effects that the pandemic had on airliner production and why things are not the same as before the pandemic.
Figure 1. The Boeing 737-8 is sold out for years. Source: Boeing.
Summary:
- Last week, we looked at the importance of skills in the supply chain and their influence on production rates.
- Now, we analyze what happened with skill levels in the industry before, during, and after the pandemic.
Pontifications: IAM 751 gearing up for Boeing contract talks in 2024
By Scott Hamilton
Sept. 19, 2023, © Leeham News: It’s September 2023, one year ahead of the expirations of the current labor contracts between Boeing and its touch labor union, IAM 751. (The contract with the engineers union, SPEEA, expires in 2026.)
The IAM district, whose members assemble all Boeing airplanes in Washington State, fired a warning shot across Boeing’s bow last week. It wasn’t the first.
751 urged its members to begin saving money in anticipation of a strike in September 2024. That was three years ago.
The strike fund information appeared in the 751’s March 2020 newsletter, Aero Mechanic. The same issue had commentary about the new pandemic. At that point, nobody thought the pandemic would last two years.
Boeing was already in trouble then. The 737 MAX had been grounded since March 2019. There was no end in sight when the grounding would end. Suspension of the 787 deliveries, for what became 20 months, was still another half-year away.
Analysis: Labor issues continue to challenge aerospace industry
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By Bryan Corliss
Sept. 18, 2023, © Leeham News – One of the continuing themes we’re hearing – at investor presentations and on quarterly earnings calls – is the shortage of skilled labor, which is disrupting deliveries up and down the aerospace industry supply chain.
The inability of suppliers to deliver parts on time – or to deliver correctly assembled parts – is hampering the OEMs as they attempt to ramp up production to meet high demand from airlines.
This is not just an issue affecting aerospace. There’s a general shortage of medium- and high-skill workers in the Western world right now, with shortages of every kind of worker from line cooks to truck drivers. Shortages existed prior to the Covid-19 pandemic, and there’s still strong demand, even with economies slowing as central banks move to tamp down inflation.
The issue is more pronounced in industries that rely on high-skill workers – like aerospace.
One outcome of this worker shortage is a rise in union activism. In aerospace, we’ve seen the strike by the International Association of Machinists against Spirit AeroSystems this summer, and the near strike by members of the same union against Boeing’s defense business in and around St. Louis last year.
Next year, both Spirit and Boeing will be back at the bargaining table; Spirit to negotiate with members of SPEEA, the union for aerospace engineers, while Boeing holds talks with IAM District 751, which represents hourly workers at the company’s plants in Puget Sound and Oregon.
IAM 751, in fact, is urging members to prepare for what it’s describing as a September 2024 contract vote that will “forever change the aerospace industry.”
The environment seems to be favorable to the unions, for reasons we’ve discussed before. However, with the OEMs and Tier 1 suppliers heavily in debt (and currently bleeding red ink), there’s going to be a limit to what the companies will be willing to offer in a bid to satisfy their labor forces.
- Demand for workers remains strong
- Lack of skilled labor is hurting industry
- Boeing, Spirit aren’t strong financially
- UAW strike bellwether for next year’s talks
GE Aero sees growth through 2026, despite supply chain snags
By Bryan Corliss
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Sept. 15, 2023, © Leeham News – Demand for aircraft engines and spare parts will continue to grow in 2025-26, but perhaps at a slower rate than what the industry is currently experiencing, the CFO of GE Aerospace said at an investor conference Thursday.
“Clearly the demand is robust,” Rahul Gai, who is CFO of both GE and GE Aerospace, told investors gathered at Morgan Stanley’s annual Laguna Conference. “We are trying to ensure we meet the demand expectations.”
GE Aero plans to deliver some 2,000 LEAP engines next year, which is up from this year’s projected total of 1,700, he said. This comes even as the company continues to deal with supply chain constraints caused in part by a lack of skilled labor.
- GE Aero and Vernova on track for two-company split
- Chinese recovery driving 2023 growth
- GE sending engineers to help its suppliers
Bjorn’s Corner: New aircraft technologies. Part 30. Detailed design -2
By Bjorn Fehrm
September 15, 2023, ©. Leeham News: Last week, we described the beginning of the Detailed design phase of an airliner development program. We discussed the importance of a good information set from Preliminary design, ideally as a collection of digital models forming a Preliminary level digital twin.
We now discuss how the work is managed in the Detailed design phase and how to speed up the work and make it more efficient.
Figure 1. The development plan for a new airliner. Source: Leeham Co.
The Airliner Production Problem
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By Bjorn Fehrm
September 14, 2023, © Leeham News: For more than a year, we have heard all the Airliner OEMs complain that they can’t increase production rates because of delivery problems in their supply chain. It’s a problem that is not easy to fix; it just goes on and on.
What is the root problem behind the persistent problem of increasing production of our airliners? There are specific problems for each aircraft type and time, but some fundamental problems are behind the overall problem of increasing the production numbers.
We analyze these fundamental problems in a series of articles.
Figure 1. The Airbus A321, a model which a new customer gets delivered six years from now if the production increases to plan. Source: Airbus.
Summary:
- We start describing the realities of airliner production, and what a gigantic puzzle it is.
- We also delve into the learning curve, and why it has such importance for production rates.
Pontifications: Moonshot for engines for Next Boeing Airplane may have to wait
By Scott Hamilton
Sept. 12, 2023, © Leeham News: The Next Boeing Airplane (NBA) may be a moonshot for CEO David Calhoun, but airlines will probably be reluctant to take a moonshot on the next new engine.
Service issues with the CFM LEAP and Pratt & Whitney GTF engines are driving airlines batty. The failures of the Rolls-Royce Trent 1000 years after entry-into-service (EIS) cost RR hundreds and millions of dollars and a confidence crisis that hurt future sales. LEAP engines are coming off wing well before initial forecasts. Every aircraft model using the GTF faced groundings as engine failures piled up.
Boeing sorely needs a successor to the 737, now in its 55th year and fourth iteration. Ron Epstein, the aerospace analyst for Bank of America, was biting in a Sept. 7 research note.
Flying a Boeing 737 is like driving a ‘68 Chevy Impala with a semi-modern dash.
“We note that Boeing continues to ride on the coattails of its past glory. The original Boeing 737 prototype first flew in April 1967, entering service less than a year later in February 1968 with Lufthansa. Fifty-five years later, the 737 airframe remains in service through a multitude of derivative models, including the most recent 737 MAX,” he wrote.
“However, we note that the model was never intended to be such a blockbuster long-term solution. Instead, the 737 was expected to be a band-aid for the Boeing portfolio to compete with the market share-winning DC-9. The Boeing fleet lacked a smaller narrowbody model to complement the company’s larger jets, like the 707. In the spirit of the General Motors model, the 737 was intended to be the ‘cheap Chevy’ of the portfolio. Fledgling carriers would operate the cheaper model before upgrading to Boeing’s large, higher-end products like the 707 and, later, the 747, which one could see as the ‘Cadillacs’ of the portfolio.
“In our view, while the longevity of the 737 is impressive, the aircraft is now a bit of an anachronism. Operating the aircraft is like driving around in a 1968 Chevy Impala with a semi-modern dashboard. It is important to note that the 737 is the only currently manufactured commercial aircraft without fly-by-wire controls, which are a staple in modern aircraft control system design.”
Epstein worked for Boeing from 1995 to 1999 as an Applied Research Scientist. He’s a technical advisor to United Airlines for the alternative energy sector.