Leeham News and Analysis
There's more to real news than a news release.
Ahead of Boeing earnings
Update, April 22:
Here is the link to Boeing’s 1Q09 earnings. Here is the link to the 1Q09 PDF slide show that goes with the earnings.
Original Post:
Tomorrow (April 22) is the release of Boeing’s 1Q09 earnings. Here are some thoughts ahead of the release.
- Do not look for any announcement on rate reductions of the 737. Boeing previously announced reductions of the 777 line and freezing rates of the 747 and 767 lines. There continues to be a lot of speculation that the 737 rate will be reduced soon. Whether it is or isn’t don’t expect any announcement tomorrow. Someone will try to get guidance about 2010 rates.
- There continues to be speculation that Boeing Capital Corp. will have to do more customer financing ($1bn) than has previously been announced. As of this moment, we don’t expect anything new on this front, either. There ought to be discussion about the 2009 funding gap and how funding is beginning to look in 2010. Read more
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.