Leeham News and Analysis
There's more to real news than a news release.
Boeing supplier plans 32% decline in 737 rate by year end
Update, February 27: Just kidding—
Curtis-Wright tells us their officials [m]ucked up and there is nothing to support the statements reported below, as extracted from their year-end 2008 earnings call. CW has no information regarding a rate reduction by Boeing this year.
What is especially troubling here is that CW did not put out a public statement correcting their error. Although CW followed up with calls to the aerospace analysts, the common shareholders of CW, Boeing and other suppliers relied on the earnings call and the transcript to make investment decisions. The failure of CW to make a public correction of this material error is highly irresponsible.
Original Post:
Boeing supplier Curtiss-Wright plans to provide Boeing with only 21.5 737 shipsets per month by the end of the year, from the current level of 31 a month.
The revelation was contained in the CW earnings call of February 18 and overlooked by the Boeing-focused media. (We were just returning from our submarine venture in the Atlantic and are only now catching up.)
Here is what CW said in its 2009 forecast:
In our commercial market, we expect to be flat. Commercial aerospace, we see flat shipments to Boeing year-over-year, because last year we shipped about 305 737s and we looked at commercial aerospace from a Boeing side, surely the 737 that drives our revenues and last year because of the strike, we shipped about 305. This year, we’re anticipating shipping around 315 and we expect the beginning of the year to be at 31 ship-sets a month for the first six months, and it then goes down to about 21.5 ship-sets for the last six months and we expect Airbus to be down.
The company added, in a response to a question:
Gov. Boeing to Commerce (Redux)
Substitute Gary Locke’s name for Christine Gregoire and it’s the same analysis.
Trident subs pass milestone
I’m going to deviate from the usual editorial “we” and the usual Airbus and Boeing focus to share with readers my trip last week on a Trident nuclear submarine, referenced in this previous post.
Through my association as a columnist for Armed Forces Journal magazine, I was privileged to receive an invitation for a two day, two night embark on an SSBN sub in connection with the Navy’s recognition of the milestone 1,000th mission of the D-5 Trident missile.
The D-5 Trident missile serves as the submarine force’s principal nuclear deterrent. The SSBNs are one of three triads that protect this country against our adversaries. The land-based ICBM and the USAF represent the other legs of the triad, but the SSBNs today represent 54% of the deterrent force.
Turmoil in aerospace
A Seattle public radio station, KPLU, has a five minute audio report wondering about Boeing’s future in the Puget Sound area.
CNN reports Embraer will lay off 20% of its 21,000 workforce. Here is the Reuters report.
Airbus adjusts production
Update, Feb. 20: Flight Global has this report with a dire prediction from the IATA General Director that Airbus and Boeing won’t be able to deliver half of the aircraft scheduled this year because of the credit crunch.
And we’re told that many in the Airbus supply chain have already made plans for lower production rates than announced yesterday by Airbus.
Original Post:
Market Watch had this report today:
Airbus said it’s reducing the production rate on its A320 single-aisle family of aircraft to 34 a month from 36. Additionally, it now plans to hold work on the wide-body A330/A340s at 8.5 a month, instead of increasing it further as previously planned.
We think this is just the tip of the iceberg. See our report from February 13. For now Airbus reaffirms its delivery target for 2009, with the production adjustments scheduled to take place from October. But Airbus’ CEO said in a statement that “I do not exclude further production cuts if the need arises.”
Dow Jones filed this report about France’s Safran, the parent of Snecma, which is the joint venture partner of CFM international, supplier of engines to the Boeing 737 and Airbus A320:
Go ‘Bama
We’ll be off line for five days while we go for a ride:
_50.jpg "USS Alabama")
USS Alabama, SSBN 731: Source Wikipedia
We write for Armed Forces Journal magazine and for the next few days we will be on a Trident nuclear submarine. Eight years ago we had the opportunity to have a short ride on the USS Alabama. It’s not Airbus or Boeing, but it’ll be more fun.
Update, February 18: We’re back from our trip on the USS Maryland into the Atlantic. We need a few days to catch up and then we’ll write a piece, probably during the weekend, about this embark.
USS Maryland, SSBN 738: Source-US Navy
Assessing production cuts
The big question being asked by just about everyone with an interest in aviation these days is what are Airbus and Boeing planning for production rates this year and next.
Jobs are at stake in an economic environment where, in the USA, the number of jobs lost since the start of the current recession is equal to or more than the population of Chicago. European labor laws make it more difficult to simply chop jobs, but even so this is a concern.
Suppliers are worried that Airbus and Boeing will cut production rates, hurting their businesses (and leading to more job reductions).
Here’s an encapsulating review of what’s going on.
Puget Sound conference looks at Boeing, aviation
We just attended a two-day conference organized by the Pacific Northwest Aerospace Alliance, a major event in Seattle’s Puget Sound region.
Michele Dunlop of The Everett Herald wrote several stories; here are our impressions.
- Surprisingly, given the downturn in the economy, there were about 50 more attendees to the conference than last year. This speaks to the growing importance of this event and the desire on the part of suppliers to prepare for what all expect to be production cuts by Boeing.
- Although Boeing is now openly talking about a 10% production cut in 2010, two major suppliers at the conference we talked to believes this could happen in the second half of this year.
- Boeing on Tuesday at two separate investors’ conferences reaffirmed its schedule for first delivery of the 787 in 1Q10. One supplier we talked to at the PNAA conference believes first delivery will be later in the year than that.
- Airbus touted its US supply base at the conference. Washington State ranks #4 in terms of dollars spent in the US.
- Washington State and Snohomish County (Everett, where the wide-bodies are built) officials at the conference are considering strategies to keep Boeing’s next new airplane programs in Washington and Everett. Proceeding on the assumption that Boeing may try to relocate these to other states, the county economic development group in particular is concerned that Legislators don’t believe Boeing might pick up and move–that all discordant notes espoused by Boeing are just talk. (Our comment: the Legislators seem to have short memories; Washington barely retained the 787 assembly; Boeing officials have about had it with the unions.)
- Richard Branson’s tongue-lashing of Boeing and the unions was a topic of networking discussion. One Seattle newspaper reporter who covered the Branson threat to cease buying Boeing because of labor strife at the company believes the entire tirade was choreographed by Boeing and Branson to send a harsh message to the IAM, which struck the company for 57 days–delaying delivery of a Boeing 777 to Branson’s VAustralia airline.
787 lightning protection
Dominic Gates at The Seattle Times had a long story Sunday (Feb. 8, 2009) about the Federal Aviation Administration relaxing rules on lightning strikes as too stringent and which the new composite Boeing 787 cannot meet.
The rules, adopted following the in-flight destruction of TWA Flight 800, a Boeing 747 (which crashed for reasons other than originating with a lightning strike), could not be met by other manufacturers, either, according to the Gates story. What we find eyebrow-raising is that the FAA proposes changing the rules to permitting only one system for lightning protection, abandoning the decades-long concept of redundancy for safety.
You have to read the Gates story for the details and why the FAA thinks this move is OK in the case of the 787.
But we’ll point out that there is a recent example of an aircraft design without a second back-up system leading to a fatal crash: Alaska Airlines Flight 261, when the McDonnell Douglas MD-83 lost control, inverted and crashed into the Pacific Ocean when the vertical tail’s jackscrew failed. This system controls the horizontal stablizer on the top of the T tail. Alaska, with approval of the FAA and Boeing (which by then had acquired McDonnell Douglas), changed suppliers for the grease and the maintenance interval for the jackscrew. This proved a mistake; the new grease wasn’t as durable as the old. Then the grease wore out, the jackscrew failed and because there wasn’t a second system, the flight crew lost control of the airplane. Everyone was killed in the ensuing crash.