Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- 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
- How good is the C929? Part 2. April 24, 2025
- Boeing First Quarter Results Update: China is 10% of the backlog, with 500 in “Unidentified” April 24, 2025
- Boeing First Quarter Results: Tariffs, Return flights, $10.55bn asset sale April 23, 2025
KC-767 cost advantage over KC-45
Boeing has released the results of a study it commissioned on the life-cycle cost advantage of the KC-767 vs. the KC-45, this time using a firm we’ve actually heard of and greatly respect: AeroStrategy.
AeroStrategy analyzed 10 scenarios, fuel price escalation, maintenance, and a variety of other factors to conclude that over the life of the program, the KC-767 will cost $11bn-$36bn less than a fleet of KC-45s.
‘You can’t kick ass without tanker gas’
Here is an interesting British perspective on aerial refueling tankers, via the UK’s Defense Management Journal.
Boeing signs US composites tooling deal
Boeing has signed a $53m deal with Aerospace Composites & Transparencies, the California-based division of Britain’s Hampson Industries.
Aerospace Composites, which also has plants in Texas and Michigan, builds tooling for composites work. Although Hampson would not directly confirm the contract is with Boeing, a spokesperson acknowledged that several aerospace analyst reports that it is are not wrong.
The contract is believed likely connected with Boeing’s plan to expand its US-based production on the 787-9 and future airplane programs.
And speaking of advanced materials, this story discusses a variety of them. It is from the magazine Metal Miner.
787 stands down suppliers third time
Boeing has implemented its third, 30-day stand-down for its supply chain on the 787 program. Says Boeing:
As we have previously indicated, when opportunities arise we distribute flow in our production system to make the most efficient use of resources by ourselves and our global partners. We periodically align our production plans to meet adjusted customer needs, taking advantage of this flexibility in the market to further strengthen the 787 production system. This technique of balancing deliveries to most efficiently manage flow and customer requests within the production system is a common practice for our airplane programs.
A350: Development is running 6-8 months late, says a key supplier. This supplier believes there is still a chance Airbus will deliver the A350 in 2013, as promised, but it will be close.
Tanker update
It’s been a while since we’ve talked about the KC-X tanker competition, which is coming to the forefront again with the issuance of the Interim Report on Boeing subsidies by the WTO.
- Flight International has this story citing Ralph Crosby, chairman of EADS North America, talking about costs and process in the competition.
- The Telegraph of the UK has this story about the boondoggle lease deal of A330 MRTTs for the Royal Air Force. A reminder of how lease deals such as that proposed by Boeing in 2001 for the USAF (and killed because of the pricing and improprieties) can be way too costly, the UK MRTT deal is also an example of how dopey specifications can ruin a good idea. The UK DOD didn’t require combat-ready specifications (note to critics: this wasn’t an Airbus failing but a Department of Defence failing) for the MRTT. The UK situation also is indicative of old tanker-transports in need of replacement, just like the US KC-135. Most notably of the parallels is this statement in The Telegraph’s story: But in an era of budget shrinkage, how we buy equipment is as important as what we buy. The AirTanker deal is only the most obvious example of a procurement process that takes too long, costs too much and, even then, doesn’t always give us what we’re supposed to get.
Boeing WTO report due today
Update, 6:45pm PDT: Dominic Gates of The Seattle Times updated his 12:45pm snippet eight minutes ago with far more detail, and as of this moment represents the most detailed news report we’ve seen.
As before, both sides are in major spin control, and as before, we will continue to withhold our judgment until the Final Report is issued months from now. But we will note that in the Airbus case when the Interim Report was issued, it turned out the USTR/Boeing spin was (in our judgment) more on target overall than was the EU/Airbus spin.
Update, 4:30pm PDT: Boeing issued a follow-up statement, reproduced after the jump following their advance statement.
Update, 3:00pm PDT: As we did when the US complaint against Airbus came out, we are largely withholding our commentary because we don’t have access to the Interim Report and neither do the Airbus and Boeing spin machines, nor the politicians.
We urge caution in drawing conclusions. The various updates below show the wide variations of what is contained in the reports and we are skeptical of what any vested interest has to say.
We will withhold any of our definitive opinions for what will amount to months, when the Final Report comes out next year.
Update, 10:15 AM PDT: The first actual detail of the WTO Interim Report has leaked, with the BBC providing this report. Boeing got $20bn in illegal aid, says BBC.
BBC reports that $4bn in Washington State tax breaks are part of these.
10:30 AM PDT: As with the Airbus case, both sides are claiming a win.
Update, 12:45 PM: The Seattle Times reports Reuters (and, apparently, the BBC) had the amounts of the illegal subsidies provided Boeing as vastly overstated, and closer to $3bn instead of the $20bn initially cited by Reuters and BBC. If this set of leaks is accurate, this would be a clear victory for the US and not Europe, giving the US essentially two major victories. This could also be a big relief for the State of Washington. Although Gates’ story doesn’t detail precisely what was found illegal, the amounts cited cast doubt on just how much–if any–of the State tax breaks were illegal.
Update, 2:45 PM: The Financial Times of London has a story (free registration required) that paints a very different picture than The Seattle Times and US Boeing partisans. The Financial Times puts specific numbers on the findings, including a reported $5.7bn of illegal subsidies on the Boeing 787 alone. This is more than The Seattle Times is quoting for the entire Interim Report, based on the information it received.
The specificity of the numbers in The Financial Times is important vs. the generalities of some of the other report and statements, including those of the USTR.
Original Post:
The long-awaited and thrice-delayed WTO Interim Report on the alleged illegal subsidies provided Boeing is due to be issued to the EU and US governments today.
The Interim Report is confidential, but leaks are expects, just as they were when the WTO issued the Airbus report. It will be months before the final, public report is issued.
Boeing has already issued a statement in advance of the report (see after the jump). We’ll follow this throughout the day.
For Washington State, the $3.2bn in tax breaks (over 20 years) provided Boeing for the 787 are expected to be a major part of the case.
Here are a couple of selected stories in advance of today’s events:
KIRO-TV (Seattle): Boeing rejects negotiations.
Wall Street Journal: Boeing likely to lose WTO ruling.
AFP (France): Titantic battle goes to the wire.
Reuters: EU Win unlikely to dampen US push over Airbus.
777-300ER, 737-800 top Airfinance Journal poll; A330, A320 close behind
Boeing’s 777-300ER once again topped the poll by aviation financial trade magazine Airfinance Journal, which has been doing the polling for as long as we can remember.
On a scale of 0-5, the 777 ranked 4.2, followed closely (but under 4.0) by the Airbus A330-200 and A330-300.
AFJ polls investors who finance or buy airplanes for their preferences.
Gary Liebowitz of Wells Fargo Securities published the rankings in his latest Liebo’s Leasing Letter.
Voice of Watergate Past: Tanker date may be “inoperative”
It never ends.
Reuters has this story that the tanker award date may slip from the November 12 dated, but we shouldn’t be surprised, since we suggested as much quite a while ago.
What caught our attention is the wording of the USAF statement, as reported by Reuters:
Boeing to use 10 787s for tests
Update, Sept. 2: Boeing retracts its information to Buckingham.
Buckingham just put out a follow-up note to its one issued yesterday, cited below. Interesting to say the least:
BA is using 2, not 4 additional aircraft for 787 certification
Yesterday we reported that BA is using 10 aircraft in the certification process vs. 6 originally to prevent further 787 delays. Today, BA contacted us to clarify their initial statement calling for 4 additional aircraft in the 787 certification program. BA now states that only 2 additional 787 aircraft will be used in certification: aircraft #9 for ETOPS and another unspecified 787 for ground tests. We believed that first delivery could slip into 2Q from 1Q given the need for 10 aircraft in flight test. Eight aircraft in flight test improves our outlook and lowers the risk of another 787 delay. (Emphasis is Buckingham’s.)
Update, 3:30PM PDT:
Boeing issued this statement:
There will be limited testing on two additional airplanes for a total of eight airplanes (not four for a total of 10). The additional testing is driven by the requirement that some of the testing be done on airplanes in production configuration as opposed to flight test configuration. One airplane will do some ground testing. The other will do some flight testing.
We also received this statement from Boeing:
We will be doing testing on two airplanes in addition to the dedicated flight test fleet. Some of the later tests require airplanes that are in production configuration. This has always been part of the baseline plan.
Although Boeing says this was “always part of the base plan,” Buckingham’s report was the first time we’ve heard of more than six airplanes (whether it’s eight or 10) being involved in the test program. Analyst and media presentations never mentioned this, that we are aware of. In fact, those who followed the 787 program will well remember that Boeing was very clear: they felt they could do the flight testing in eight months (a timeline that drew universal skepticism on Wall Street) because there would be six airplanes doing the testing, an increase from the 777 test program.
What we now understand from our sourcing is that more than six airplanes were part of the contingency plans in case things went south.
Update, 1:15pm PDT: Guy Norris of Aviation Week has this report on why the Trent 1000 failed.
Original Post:
Boeing will use 10 787s to complete certification, a Wall Street aerospace analyst reported today in a research note, the first time this has been revealed.
Richard Safran of Buckingham Research writes:
Originally, BA intended to use six 787 test aircraft for certification. BA CEO Jim McNerney previously spoke about contingency plans to maintain the 787 flight test schedule. One plan was to shift ETOPS (Extended Twin-engine Over-ocean Performance Specification) testing from the original 6 flight test aircraft to 787 #7-10. In order to prevent further delays to the 787 schedule, BA is now using 10 aircraft in the certification process. The engine failure of 787 #9 in ground test delayed certification (and first delivery) because RR did not have a replacement. Since BA is now relying on 10 aircraft for certification and given the difficulty getting 787 #6 into the test program (now slated for September), we think it’s possible first delivery of the 787 could slip beyond 1Q11 to 2Q11.
Separately. we inquired of Boeing about some other aspects of the engine issue (Rolls-Royce, as is typical, did not respond for comment).