Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing CEO: Lessons learned are key to certification of 737-7/10 and 777X June 2, 2025
- Digital twin is a key to JetZero’s hopes for Blended Wing Body entry June 2, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 24. May 30, 2025
- Does an A220-500 need a new wing and engines? Part 3. May 29, 2025
- Boeing’s future depends on FAA approvals May 26, 2025
More on the funding gap
A Calyon bank official said at the annual Airfinance Journal conference that Airbus and Boeing may have to increase funding more than the companies expected this year because the funding gap is larger than thought. This Bloomberg story has the details.
Calyon has been one of the most active lenders worldwide.
Gates on split tanker buy: over my dead body
US Defense Secretary Robert Gates said there will be a split buy on the KC-X tanker program over his dead body.
“I’m laying my body down across the tracks,” Aviation Week quotes as saying in this short article.
It’s not Robert Gates but you get the point.
American’s 787 deal
American Airlines revealed the following in its 10Q quarterly report about the provisional order with Boeing for the 787:
In 2008, the Company entered into a new purchase agreement with Boeing for the acquisition of 42 Boeing 787-9 aircraft. Per the purchase agreement, and before delays due to the recent Boeing strike as discussed below, the first such aircraft is scheduled to be delivered in 2012, and the last is scheduled to be delivered in 2018. The agreement also includes purchase rights to acquire up to 58 additional Boeing 787 aircraft, with deliveries between 2015 and 2020. Based on preliminary information received from Boeing on the impact of the overall Boeing 787 program delay to American’s delivery positions due to the strike in 2008, the Company
Will Boeing leave Washington State?
As readers know, there has been a lot of news in the past week about whether the business and labor climate in Washington state is such that Boeing will leave for the sunny South.
Here is a poll–cast your vote to tell us what you think. You may vote multiple choice.
New Boeing economic impact analysis issued
The Washington Research Council today (April 14) issued an eight page analysis entitled, “What if Boeing Left Washington?” The PDF file may be found here.
The WRC is a local, Seattle-based conservative think tank that focuses on economic issues in the state. The report was issued through its Washington Alliance for a Competitive Economy affiliate (WashACE).
Among the findings:
UBS predicts 30%-40% 737 rates cuts
UBS Securities today (April 13) predicted Boeing will have to cut rates on the 737 line by 30%-40%, forecasting an announcement later this year.
This is more agressive than the 30%-35% suggested in January by ILFC CEO Steven Udvar-Hazy and greater than anything we have heard that is being discussed in Boeing. UBS’ forecast suggests a monthly production rate of 21.7 (30%) to 18.6 (40%) per month. The lowest number we’ve heard being discussed in Boeing is 24-26 a month (23%-16%). Boeing currently produces the 737 at the rate of 31 a month.
UBS forecasts 361 737 deliveries this year, or 30 a month; 300 next year (25) and 240 (20) in each of 2011 and 2012.
The company forecasts just 25 787 deliveries next year and 60 in each of 2011 and 2012.
Airbus details Watchtower Committee
We previously wrote a story for Commercial Aviation Online about Boeing Capital Corp.’s War Room methodology in tracking the “funding gap” for 2009 deliveries. We posted that story on this website at this link.
We followed that CAO story up with a profile of the Airbus BCC equivalent, the Watchtower Committee. Here is that story:
Boeing cuts production
Boeing just announced it is cutting production of the 777 from seven to five a month and delaying plans to increase rates on the 767 and 747, effective next year, it was announced today. No rate adjustment is planned for the 737 at this time. The rate for the 737 is 31 a month.
The decision comes a month before BCA President Scott Carson previously said it would.
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.
