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 14. March 21, 2025
- How good is the COMAC C919? March 20, 2025
- Boeing CFO Brian West: OK on tariffs for now, backlogs and inventories help March 20, 2025
- Pontifications: Southwest’s core problems are not solved by business model changes-yet March 19, 2025
- Boeing 2024 Proxy Statement: Executive Compensation includes retirement gifts for Calhoun, Deal; housing support for Ortberg, Pope, and other stuff March 17, 2025
Washington State lags competitively
Update, 3:25 PM: Gov. Gregoire announced the new aerospace council, as reported by the mainstream media, and she also announced a plan to increase aerospace training. But her plan calls for coordinating community college aerospace training programs and the aerospace programs of the senior colleges.
All well and good, but this misses the mark. We’ll be talking about this at our speech to the Economic Development Council of Snohomish County on April 22.
Also missing the mark: Gregoire made the point several times about building airplanes in Washington vs. other states. Washington officials and all the stakeholders, including the unions, need to convince Boeing to bring work back to Washington from other countries and commit future work for future airplane programs right here in Washington. Nothing was said about this.
Update, 1:55PM: The Associated Press reports, via The Seattle Post Intelligencer, that the Governor is going to announce the establishment of an aerospace commission–one of the recommendations of the Deloitte report. The AP said it got a copy of the report through a Public Records request. The report, of course, was here first. Andrea James of The P-I is updating her blog with new information. It may be linked here. Dominic Gates of The Seattle Times has this report in advance of the Governor’s press conference.
Update, 1:45 PM: Gov. Gregoire will hold a press conference at 2:45 PM PDT April 9 to discuss this study. It will be carried live by the Washington State TVW public information network, which also streams on the Internet. The link to the main TV page is here; you’ll have to scroll to the event itself.
Update, 9:30 AM: We were just told by a member of the Washington State Legislature who was briefed on this report that no copies were going to be distributed to the Legislature:
We had the briefing from Deloitte on Monday night and the Gov. was briefed on Tuesday morning. We were told we could not have copies and the presentation Powerpoint would be erased because circulation would be “devastating” to the state’s competitive posture. From my reading of the materials, it was fairly common sense and not necessarily profound on issues we have known for quite sometime, at least from an insider’s perspective.
We find the plan to keep this report from the Legislature, which would be asked to make any changes to laws and compensation, to be very troubling. It’s also very stupid. Anytime someone tries to keep key documents from key stakeholders and decision-makers, someone is going to leak it. There is no greater resource than a pissed off one.
Additional Note: We are making a speech April 22 on the topic of retaining the anticipated second 787 production line in Washington before the Economic Development Council of Snohomish County and are addressing some of the issues in this report.
Original Post:
A new study by Deloitte performed for the Economic Development Council of Snohomish County (where Boeing’s Everett wide-body plant is located) concludes that Washington State is uncompetitive in attracting new aerospace business.
The report, which has not been released publicly and is to be used by the Governor to make a case for changes in state laws to ease business costs for Boeing and other firms, was obtained by us.
The Aerospace Industry Competitive Study may be downloaded. It is a 38 page PDF file.
Among the conclusions:
GE Boss seeks tanker compromise
The head of GE backs a plan to split the acquisition of the KC-X USAF aerial tanker between Northrop Grumman and Boeing, according to this interview done by the Cincinnati Enquirer.
GE Aviation will supply the engines on Northrop’s KC-30; Pratt & Whitney was selected to power Boeing’s KC-767.
And now, a plug for a conference organized by Air Transport World and Leeham Co.
Airbus predicts 480 deliveries in 2010
Airbus’ COO-Customers, John Leahy, predicts 480 deliveries in 2010, about the same number as this year, according to this Aviation Week article by Robert Wall.
Boeing takes hard hit on DOD budget
Boeing took a hard hit on the Defense budget announced today by Sec. Robert Gates. The C-17 program will be canceled after the current contract is filled. The CSAR-X helicopter procurement is canceled. The Airborne Laser system based on the 747, is reduced to research only. The Next Gen bomber is off the table. There are other programs in which Boeing was involved that are gone, too.
This makes the recompete for the KC-X aerial tanker all that much more important. Gates said this will proceed in the summer.
Update: Defense Industry Daily has this superb recap of the winning and losing programs.
We did a podcast with Addison Schonland of IAG and George Talbot of the Mobile Press-Register about the implications for the tanker procurement.
Here is a link to Gates’ formal statement.
Boeing Capital details methodology
Following the annual ISTAT meeting in March, we published a piece about the Boeing view of the so-called funding gap for 2009: the financing shortfall seen by just about everyone except Boeing and Airbus as between $10bn and $25bn this year needed to pay for more than 1,000 airplanes due for delivery by the Big Two and Bombardier and Embraer.
Boeing believes the gap is $0-$5bn and Airbus, though not presenting at ISTAT, has a similar view.
We mentioned in our story that we have been invited to visit Boeing Capital officials to get detail about their methodology. We did, and we wrote that piece for Commercial Aviation Online, for which we are a regular contributor. That piece was published April 2. We can now reprint it below.
Major shift on split tanker contract
Update, April 3: The New York Times has this long piece on the prospect of a split procurement.
Original post:
It is a subtle but major shift on the controversial proposal to split the KC-X aerial tanker contract between Northrop Grumman and Boeing.
KIRO TV (CBS) in Seattle interviewed US Rep. Norm Dicks (D-Boeing/WA), who throughout the previous competitions has been dogmatically in favor of a single contract to Boeing. Dicks is #2 on the House Appropriations Committee, where any funding bill will have to originate. The chairman of the committee is US Rep. John Murtha (D-PA), who came out solidly in favor of a split contract as the only way to break the logjam over an award.
Airbus may scrap A400M
Airbus may scrap the troubled A400M program, according to this London Telegraph report of a Der Spiegel interview with Airbus CEO Tom Enders.
Peugeot Citroen fired Christian Streiff, who designed the Power8 restructuing program for Airbus but then resigned after three months in a power struggle. Here is the report picked up by The New York Times.
Update, 4:00 PM March 30: Airbus discounted the London Telegraph/Der Spiegel report and says the company remains committed to building the A400M. Here is the Reuters report.
The picture about the future of the A400M is about as clear as this one.
Source: EADS
2nd Eco-Aviation Conference set
The second Air Transport World-Leeham Co. Eco-Aviation Conference has been scheduled. More information is here.
ILFC in perspective
Update, March 26, 2:20PM PDT: Bloomberg News moved this piece in which ILFC’s CEO says he’ll get the lessor out from under AIG’s “cloud.”
Original Post:
Mega-lessor International Lease Finance Corp. filed its 2009 10K annual report March 25 with the Securities and Exchange Commission. In it, the company discussed possibilities that could create what’s called a “going concern” situation.
In accounting-speak, the reference is all about bankruptcy. If a company or its auditors raise questions about the ability to continue as a “going concern,” this means there is a possibility the company could seek protection in the US bankruptcy courts. This almost always is a Chapter 11 reorganization filing rather than a Chapter 7 liquidation action.
Boeing takes a direct hit
Boeing is gearing up for a new fight over the KC-X tanker competition but out of the blue, it took a direct hit on the Airborne Laser program, which uses the 747 as the platform.
A California Member of Congress, and a Democrat at that (Ds generally tend to favor Boeing over Republicans), called the ABL program “insanity.” Politico, which covers politics but not usually defense items, gave this piece prominate placement on its website.