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 20. May 2, 2025
- Supplier Howmet exceeds expectations despite tariffs May 1, 2025
- Airbus 1Q2025 results: So far, so good, but US tariffs make future results unpredictable May 1, 2025
- Does an Airbus A220-500 need a new wing and engines? May 1, 2025
- Teamsters, Boeing have a new contract April 29, 2025
Pontifications: A contrarian view of Stock Buybacks
By the Leeham News Team
April 25, 2023, © Leeham News: Airbus and Boeing last week held their annual shareholders’ meetings. Boeing continues to suspend dividends and stock buybacks as it struggles to recover from the grounding of the 737 MAX and delivery suspensions of the 767/KC-46A, 787, and 737 (again); and the years-delayed certification of the 777X. Losses and charges at its defense unit mount as well, hurting profits and cash flow.
Before the MAX grounding in March 2019, Boeing spent more than $60bn in stock buybacks since the 1997 merger with McDonnell Douglas. “Shareholder value” became a priority—and dirty words to those who long for the days of a Boeing based on engineering excellence vs focus on Wall Street and the stock price.
Airbus has taken over the lead in airplane engineering and innovation. Boeing in November deemphasized new product development and pointed to its guidance of $10bn in free cash flow by 2025. However, Airbus now puts shareholder value as an important business goal. At its annual meeting, Airbus continues its dividend and stock buyback programs. But Airbus buybacks and dividends are a fraction of what Boeing has spent and Airbus committed to a €10bn war chest for future contingencies.
Stock buybacks remain a target of criticism. While our view of over-emphasis on shareholder value is well known—we favor a balance on free cash flow expenditures between shareholder value and new product development—there is another side to stock buybacks that haven’t been discussed.
Leeham News is going to take a step back and dig into the details of the buybacks, analyzing the numbers behind the repurchase program, its results, and possibilities for the future.
Fixing the fix: the Aircraft Certification, Safety Act
Last in a series of four articles
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By the Leeham News Team
Commentary
April 24, 2023, © Leeham News: Congress missed the boat authoring the Aircraft 
Certification, Safety and Accountability Act (the Act) because it felt that more regulations equals more safety. But the current Harvard Business Review notes that “Activity is not a measurable metric of success.” We think that additional layers of regulatory requirements are not necessarily additional layers of security.
Understanding that Congress was a bit wide of the mark, here are some of the changes we would implement if we were asked for our recommendations.
Bjorn’s Corner: New aircraft technologies. Part 9. Engine core advances
By Bjorn Fehrm.
April 21, 2023, ©. Leeham News: This is a summary of the article New aircraft technologies. Part 9P. Engine core advances. The article discusses how developments for the next-generation airliner engine cores will increase the thermal efficiency of next-generation engines.
Figure 1. The Pratt & Whitney PW1100G engine with its compact core enabled by a geared high RPM design. Source; Pratt & Whitney.
Bjorn’s Corner: New aircraft technologies. Part 9P. Engine core advances
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By Bjorn Fehrm
April 21, 2023, ©. Leeham News: This is a complementary article to Part 9. Engine core advances. It discusses in detail the next-generation propulsion system cores and what efficiency improvements to expect from different technological advancements.
The Small Airliner Problem
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By Bjorn Fehrm
April 20, 2023, © Leeham News: New Sustainable aircraft projects, for economical reasons, target small airliner types as first projects and then, after proving the concept, to move up in size. The number of 9-seat, 19-seat, and 30- to 50-seat upstarts announced over the last years must be in the hundreds.
They all claim major advances in environmentally friendly propulsion and that their first aircraft have viable business models. In their business plans, there are elaborate explanations why local air services will flourish through the introduction of small, environmentally friendly aircraft.
The reality is another. The airliner size, where more than 100 aircraft per year are delivered, is 200 seats increasing, and sales below 50 seats have slowed to a trickle. ATRs, the leading supplier of airliners below 70 seats, delivered five 50-seater turboprops during 2022 out of a total of 29. The 50-seater model stayed at around 10% of deliveries between 2014 to 2019 before COVID, when total production was 70 to 80 turboprops per year.
There are economic reasons for these low numbers, and these are not changing for the better. We will explore these reasons using our airliner Performance and Cost model in a series of articles, where we compare operational costs for 9-, 19- and 50-seaters to the larger aircraft.
Figure 1. The latest small airliner project from Maeve Aerospace. A 50-seater battery-based electric aircraft. Source: Maeve Aerospace.
Summary:
- We show the cost factors and their proportions for different airliner sizes.
- Then we look at how these factors scale with aircraft size.
Pontifications: Skyline backlog suggests higher production rate than Boeing targets for 777X
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By Scott Hamilton
By Scott Hamilton
April 17, 2023, © Leeham News: Boeing’s skyline for the 777X, reported by Cirium, suggests there will be a need to boost production higher than the company’s target of 4/mo by 2025/2026. The delivery stream data is good news for Boeing, which doesn’t detail this information. Boeing took a billion-plus dollar write-off on the program, which has been marred by delays, engine issues, and certification questions.
Boosting the production rate beyond 4/mo will be an important contributor to Boeing’s financial recovery in the second half of this decade. At its peak, Boeing produced 8.3 777s a month, or 100 a year.
The current production rate of the program is two per month, for the 777-200LRF. Boeing’s website says the combined rate for the 777 Classic and the 777X is three per month. But a year ago, Boeing said it was suspending production of the X through 2023. Corporate communications would not comment on the contradiction, citing the quiet period before the 1Q earnings call on April 26.
Air India’s order for 10 Boeing 777Xs in February (among more than 200 other Boeing aircraft) is welcome news for the slow-selling airliner.
The airline’s orders haven’t been listed yet in Boeing’s running tally of orders, meaning the firm contract hasn’t been signed.
Summary
- Data shows deliveries of 777-200LRF drops dramatically in 2025.
- Production rate goal of 4/mo by 2025/26.
- Backlog shows demand for higher production rate.
Boeing offers bonuses up to $10,000 as it searches for scarce talent
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By Bryan Corliss
April 17, 2023, © Leeham News: The Boeing Co., which has talked of making significant production rate increases “very soon,” is offering bonuses of up to $10,000 as it recruits workers in touch-labor positions in both South Carolina and Puget Sound.
In Charleston, Boeing is offering $5,000 signing bonuses specifically for experienced painters and interiors installers as it tries to first stabilize, then increase, production of 787s. Boeing wants to reach a rate of 5/mo by the end of this year and 10/mo by 2025/26.
In Puget Sound, the company isn’t offering signing bonuses, but it is offering hefty payouts of up to $10,000 to current employees who refer experienced aerospace workers to openings in a number of job categories, including structures mechanics and general machinists.
The moves come as analysts continue to sound alarms about workforce shortages across the industry.
“We continue to remain cautious on the supply chain’s ability to support the planned production rate increases in 2H23 and into 2024,” wrote Ken Herbert, with RBC Capital Markets, in a report earlier this week. “We continue to see labor availability and training as the largest headwind facing the sector.”
- Boeing hiring as it prepares to ramp up
- Boeing offers hiring incentives
- Northwest aerospace labor market is tight
- S. Carolina: Lockheed-Martin offers $10K
Bjorn’s Corner: New aircraft technologies. Part 8. Propulsion advances
By Bjorn Fehrm
April 14, 2023, ©. Leeham News: This is a summary of the article New aircraft technologies. Part 8P. Propulsion advances. The article discusses how developing the next-generation airliner propulsion system will be the second most important area after we decide on the fuselage type and what to expect from increases in Propulsive efficiency.
Figure 1. The Ultrafan demonstrator readied for tests, with its 140-inch fan giving a bypass ratio of 16:1. Source; Rolls-Royce.
Bjorn’s Corner: New aircraft technologies. Part 8P. Propulsion advances
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By Bjorn Fehrm
April 14, 2023, ©. Leeham News: This is a complementary article to Part 8. Propulsion advances. It discusses in detail the next-generation propulsion and what efficiency improvements to expect from different technological advancements.
The production cost trap for eVTOL upstarts
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By Bjorn Fehrm
April 13, 2023, © Leeham News: Last week, we gave the example of a new propulsion principle 30-seat airliner as a project that would face the liquidity strain of initial production costs. We continue today with a look at the leading eVTOL projects, where development costs are passing $1bn and growing.
What will be the cash burn before these projects generate positive cash flow from serial production sales and services? We use our production cost model to analyze the situation.
Figure 1. Our generic eVTOL uses an early rendering of the Vertical VX4 as an illustration. Source: Vertical Aerospace.
Summary:
- VTOL projects promise early payback of invested capital.
- Our production cost model says otherwise.