Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- 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
- RTX Q1 2025 Earnings: GTF Talk Takes A Back Seat To Tariffs April 22, 2025
Rolls-Royce profit soars, reinstates dividend after turnaround
By Leeham News Team
February 27, 2025, © Leeham News: Underlying operating profit at Rolls-Royce surged to £2.5bn ($3.17bn) in 2024, up from £1.6bn the previous year – a 57% increase – according to the company’s full year 2024 results announced on Thursday.
Profits soared this year. Credit: Rolls Royce
Strong financial performance in the group’s civil aerospace, defense and power systems divisions all contributed to the result, which beat analysts expectations (aside from power systems, which came below expectations) and has been hailed as evidence of a turnaround for the once-struggling company under CEO Tufan Erginbilgic’s leadership. The former BP executive previously described Rolls Royce as a “burning platform.”
Rolls Royce’s operating margin grew by 8.7pts to 13.8% last year, while free cash flow leapt to £2.4bn from £1.9bn and revenue rose to £17.8bn from £15.4bn. The £2.5bn operating profit was ahead of a forecast for between £2.1bn and £2.3bn.
As a result of the financial progress, the UK-based company has reinstated its dividend for the first time since the pandemic, announcing a 6 pence per share payout. Read more
Ortberg, SPEEA meet; union surveys members for contract negotiations, strike
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By Scott Hamilton
Boeing CEO Kelly Ortberg (left) and SPEEA president John Dimas. Credit: SPEEA.
Feb. 27, 2025, © Leeham News: Boeing CEO Kelly Ortberg met with the company’s engineers and technicians union, SPEEA, on Feb. 7. The meeting was the first since Ortberg was named CEO and took office on Aug. 8.
Neither SPEEA nor Boeing commented on the substance of the meeting. “We discussed matters of mutual concern and agreed to continue the dialogue going forward,” SPEEA President John Dimas said in a benign statement published on SPEEA’s website. Boeing declined comment.
SPEEA’s labor contract with Boeing expires next year. Negotiations won’t begin until next spring. A contract with Spirit AeroSystems’ technical workers represented by SPEEA expires on January 31. Boeing should complete its acquisition of Spirit by summer, so negotiations for that contract will be between SPEEA and Boeing.
Some SPEEA officials, noting Ortberg’s early statements about doing a “reset” with labor relations, complained that he hadn’t met with SPEEA.
But upon his arrival in August, Ortberg had his hands full. Contract negotiations were already underway with Boeing’s largest labor union, the IAM 751, whose contract expired 34 days after his arrival. The union walked out on September 13 for 53 days. Ortberg also had to deal with the long-running safety and quality control issues, the Federal Aviation Administration, and the fact that Boeing was running out of cash.
While it’s early yet, and the meeting between SPEEA and Ortberg only occurred on Feb. 7, on Feb 19, SPEEA published a survey for its members to identify issues and wants for next year’s contract negotiations. The responses must be returned by March 21. SPEEA will keep the results confined to the union’s leadership.
Among the questions is how long members would be prepared to stay out on strike. SPEEA is not prone to walkouts, as is the much more militant IAM.
Unions Flying High: Book Review
Reviewed by Scott Hamilton
Unions Flying High: Airline Labor Power in the 21st Century
Ted Reed
McFarland & Co.
Feb. 25, 2025, © Leeham News: Ted Reed has been an aviation reporter for as long as I can remember. He also worked in corporate communications for US Air. Among his focus areas is labor relations in the US airline industry. He’s also the co-author of American Airlines, US Airways and the Creation of the World’s Largest Airline.
Reed’s new book, Unions Flying High: Airline Labor Power in the 21st Century, provides a detailed look at how labor unions have resurged from a long era in which their power was eviscerated through a series of airline bankruptcies (in some cases, more than once) and carriers that ceased operations.
This painful era began with the deregulation of the US airline industry in 1979. It continued through the 1991 Gulf War, which dramatically spiked fuel prices. Then came the 9/11 terror attacks in 2001, which decimated US airlines. Add SARS (a pandemic largely limited to Asia) and other events, and unions lost most of their power. Wages and benefits were cut, and defined pension plans were terminated.
I lived through this era, first as a member of middle management with the first Midway Airlines beginning in 1979. Midway was the first airline to be certified by the then-ruling agency, the Civil Aeronautics Board (CAB), in 40 years, right on the eve of deregulation.
The CAB liberally granted applications to cut fares and awarded new routes with abandon before deregulation became official. This led to the 1982 bankruptcy of Braniff Airlines and the following year of Continental Airlines. It was Continental’s bankruptcy that truly began the series of labor defeats that existed for the next three decades, ending with America’s 2011 bankruptcy.
GE sees 2,500 LEAP engine deliveries by 2028, enough for more than 1,000 A320neos and 737 MAXes
Larry Culp, CEO of GE Aerospace. Credit: GE Aerospace.
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By Scott Hamilton
Feb. 24, 2025, © Leeham News: CFM International plans to deliver 2,500 LEAP engines by 2028, enough to power more than 1,000 Airbus A320neos and Boeing 737 MAXes plus spare engines in a single year.
CFM is the 50-50 joint venture between GE Aerospace and Safran. The 737 exclusively uses the LEAP. The A320neo family splits its powerplant business between CFM and Pratt & Whitney’s Geared Turbo Fan engines. Between the MAX and a portion of the A320neo engines, CFM has a solid majority of the market share for the mainline single-aisle aircraft sector.
CFM is the brand for the CFM56 and LEAP, but GE and Safran benefit from the aftermarket business. Between the two engines, the maintenance, repair, and overhaul business is big and profitable.
Larry Culp, CEO of GE Aerospace, spoke at the Barclays investors conference on Feb. 20.
“There’s no question that from an aftermarket perspective, LEAP on top of CFM56 is going to keep us very busy,” Culp said. “We haven’t been particularly good at calling the outlook here because we’ve undershot the reality with the CFM56 the last couple of years.”
Culp said that GE continues to believe that it’s got several years of growth ahead. “We probably don’t see an apex until probably the 2027, 28-ish time period, and then we’ll see a gradual fade with the CFM56.
“I think we’re still talking about 2,000 shop visits at the end of the decade. We’ll see if we’re right or wrong on that, but that’s our current view. I think our partners at Safran have in effect echoed that recently at their own earnings call.”
Bjorn’s Corner: Air Transport’s route to 2050. Part 10.
By Bjorn Fehrm
February 21, 2025, ©. Leeham News: We do a Corner series about the state of developments to replace or improve hydrocarbon propulsion concepts for Air Transport. We try to understand why the development has been slow.
Last week, we reviewed the present fallout of lower emission projects that have not reached their goals and where investors, therefore, have decided not to invest further.
There is a well-known project failing every month at the present pace. Some recent ones: Universal Hydrogen’s ATR conversions, Volocopter and Lilium’s bankruptcies, Airbus freezing the CityAirbus eVTOL (Figure 1) and pushing out the ZEROe hydrogen airliner, hibernation of the Alice battery aircraft, etc. There will probably be more in the coming months.
Ortberg reaffirms goal of Boeing 777X certification at first appearance at bank’s investors’ conference
By Scott Hamilton
Kelly Ortberg, Boeing CEO. Credit: Boeing.
Feb. 20, 2025, © Leeham News: Boeing hopes to certify its largest aircraft, the 777-9, late this year or early next year so that it can finally begin delivery of the 425-seat aircraft.
Delivery was originally supposed to be in December 2019 or the following quarter. However, technical delays, including those with the giant 115,000 lb thrust engines from GE Aerospace and the negative halo effect from the 737 MAX crisis, resulted in this unusually long delay.
Kelly Ortberg, Boeing’s CEO, reaffirmed the certification and delivery hopes during his first appearance since taking his job last August at an investment bank’s investor conference.
“We’re going through the flight test program, and we’re planning to get the certification done towards the end of this year or early next year so we can start the delivery,” Ortberg told the Barclays Bank event today. “The challenge is we’ve got to get through the certification here on the Dash 9 to start delivering these things to our customers.
“I was just with Carsten Spohr, the CEO of Lufthansa. He impressed upon me how critical that airplane is to his operating model,” Ortberg said.
The program is in a reach forward loss, so Ortberg said that any additional schedule delay with the program will likely result in another loss. Over the life of the program, he says it’ll be a profitable airplane.
Airbus 2024 results: “A decent year in a challenging environment”.
By Bjorn Fehrm
February 20, 2025, © Leeham News in Toulouse: The headline uses the words of Airbus CEO Guillame Faury when he opened the presentation of Airbus 2024 results in Toulouse today. It was a session where Faury and the CFO Thomas Toepfer put in an effort to let all present international journalists and their online colleagues ask all questions and deliver honest answers.
On the business-as-usual side, the company delivered 766 aircraft, which was within the guidance, after a deep grab effort in 4Q, leading to low deliveries for 1Q2025. EBIT at €5.4bn and Free Cash Flow at €4.5bn were also within guidance.
In general, the Commercial airplane side was fighting specific supply problems during 2024, which might limit the ramp-up of A350s and A220s going forward, more of which below. Helicopters have now recovered from challenging times and delivered a solid result. Defense and Space are strong in Air Power (fighters, etc.), given the tense European situation, with Space going through restructuring, which might include mergers with other European space players.
The real news was the reasons for pausing the CityAirbus eVTOL program, according to Faury, “not only because batteries were not where they should have been but also due to the lack of a market for this type of transportation.” As the world’s largest supplier of helicopters, Airbus is a credible source for such a lack of market statement.
Faury also detailed what is happening on the Hydrogen side. Due to slower-than-expected progress in Green Hydrogen production build-up, deployment of preparatory Ground Support Equipment (GSE), and Transportation using hydrogen at the airports in their H2 partner network, Airbus has decided to push out the entry into service of a “commercially viable hydrogen aircraft” by five to ten years.
However, said Faury, it has made progress. “We have reached TRL 3 for the tecnobricks, which has enabled us to select the Fuel Cell path as the preferred way forward. This means these activities are continued at the present level or even intensified, but it also means other paths (read Hydrogen burn) are ramped down. Overall, it means a decrease in R&D spending for Hydrogen activities in the coming years.”
Read more
Tier 1 suppliers are a “failed market”
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By Scott Hamilton
Feb. 20, 2025, © Leeham News: The Tier 1 supply chain is all but dead.
Kevin Michaels.
This rather startling conclusion belongs to Kevin Michaels, the managing director of the consulting firm Aerodynamic Advisory. When he explains his thinking, it supports a major shift in the aerospace industry.
He made his remarks at the Pacific Northwest Aerospace Alliance conference this month in the Seattle area.
Tier 1 supplies are the last step in the supply chain, delivering products directly to the Original Equipment Manufacturers (OEMs), such as Airbus, Boeing, Embraer, and the engine makers.
Michaels said the supply chain is “fragile” and “red hot.” “Overall, the supply chain is in better shape than it was last year at this time. It’s in better shape now than it was two years ago. But it’s still incredibly fragile.” OEMs purchase about 75% of the value of the aircraft from the supply chain. Aerostructures are the first tier. And this is where Michaels’ rubber hits the road.
Another One Bites the Dust; alternative energy gives way to realities
Grounded: Eviation’s Alice, a concept that had more questions than answers. Credit: Eviation.
By Scott Hamilton
Feb. 18, 2025, © Leeham News: Universal Hydrogen. Lilium. Volocopter. Tecnam’s electric airplane. Airbus electric. Airbus hydrogen. ATR hybrid.
Eviation was just the latest alternative energy project to bite the dust.
And these are just the ones we’ve heard about.
Boeing declined comment on the status of its WISK autonomous electric air taxi. Its future may have as much to do with the company’s current financial condition and efforts to recover from a series of crises since the March 2019 grounding of the 737 MAX than with technology or business model concerns.
The alternative energy aviation industry, the soup du jour in recent years, is running out of gas, so-to-speak. LNA’s aerospace engineer, Bjorn Fehrm, predicted years ago that battery-, and hybrid-powered airplanes were concepts that wouldn’t fly and that hydrogen’s availability at airports is tough nut to crack.
The International Air Transport Association in October 2021 adopted a goal for the airline industry to achieve net zero carbon emissions by 2050. Aggressive milestones also were adopted. Included were ambitious goals to significantly increase the use of Sustainable Aviation Fuel (SAF), the path favored by Boeing.
Tim Clark, the president of Emirates Airline, said then, Don’t make promises you can’t keep.
The industry, it now increasingly admits, can’t keep these promises.
Howmet tariffs to be paid by customers: CEO
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By Karl Sinclair
Feb. 17, 2025, © Leeham News: Howmet Aerospace (HWM), a supplier to Airbus, Boeing, and other aerospace companies, last week reported sharply improved earnings for 2024.
Howmet is a Pittsburgh (PA)-based aerospace manufacturer, generally classified as a Tier 2 supplier. It produces components for engines, aluminum and titanium structures, fasteners, and other aircraft components.
On the Feb 13, annual earnings call, Howmet Executive Chairman and CEO John Plant remarked that he expects that Howmet will be well positioned to deal with the effects of the tariffs instituted by President Donald Trump, due to the strong contracts it has. Any costs incurred in those respects will be passed onto its customers.
Howmet is segmented into four divisions: Engine Products, Fastening Systems, Engineered Structures, and Forged Wheels.