Leeham News and Analysis
There's more to real news than a news release.
Maintenance cost, availability are growing concerns for OEMs, airlines
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By Judson Rollins
November 7, 2023, © Leeham News: Maintenance costs and lead times have been a growing topic in aviation circles and financial markets since last month’s Aviation Week MRO Europe conference in Amsterdam.
Wage and commodity inflation have been widely identified as key cost drivers in many regions. However, this has been compounded by ongoing part shortages, deferred maintenance from aircraft flown less than normal in 2020-2022, and the retention of older aircraft to maintain capacity in the face of new-generation engine reliability issues and resulting groundings.
Even the Financial Times recently covered the impact of MRO constraints. Consultant Kevin Michaels of AeroDynamic Advisory told the FT that airline maintenance spending had ballooned from a historic 8%-10% of airline costs to an estimated 14% this year.
Source: Aviation Week.
Summary
- Aircraft availability limits options for carriers, spares providers.
- Spares availability further limited by commodity shortfalls.
- Labor constraints evolve from headcount to experience and productivity.
- Sustainability panel long on possibilities, short on deliverables.
Embraer’s 3rd Quarter 2023 results contain good news
By Bjorn Fehrm
November 6, 2023, ©. Leeham News: Embraer presented its 3Q2023 results today. Commercial aircraft deliveries increased by 50% to 15 E-Jets compared with 10 jets in 3Q2022, and Executive jets delivered 28 jets versus 23 for 3Q2022.
Revenue for the group increased by 38% to $1,284m ($929m) for the quarter. The Services side increased revenue by 24% to $366m ($295m). The Defense revenue was up 40% to $133m($95m).
EBIT was $84m versus $11m for the same quarter last year. The company retained the 2023 guidance to deliver 65-70 E-jets and 120-130 Executive jets for the year.
Spirit Focused on Delivering On Time and At Quality
By Dan Catchpole
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Nov. 6, 2023, © Leeham News: Spirit Aerosystems’ new CEO Pat Shanahan’s focus right now is “to restore confidence in the company” with its biggest customers—Airbus and Boeing.
During a Nov. 1st conference call discussing the company’s third quarter earnings, Shanahan said, “I recognize we have disappointed our stakeholders.”
Shanahan just came on as chief executive in October to help turn around Spirit, which has been flailing, along with much of the aerospace supply chain. Boeing and Airbus will be watching Shanahan’s progress. He gained a reputation as Mr. Fix-It during his time at Boeing.
Summary
- Market responds favorably to latest earnings report and management’s promises.
- Shanahan says Spirit is on track to deliver more than 50 737 MAX airframes in 2025.
- Goal is zero-quality issues.
Bjorn’s Corner: New aircraft technologies. Part 37. First flight test prototype
By Bjorn Fehrm
November 3, 2023, ©. Leeham News: We are discussing the different design phases of an airliner development program. After covering Conceptual, Preliminary, and Detailed design, we now discuss prototype manufacturing and testing, Figure 1.
Today, we look at the role of the first flying prototype.
Figure 1. The development plan for a new airliner. Source: Leeham Co.
NASA, Boeing Say SAF Creates Fewer Greenhouse Contrails
By Dan Catchpole
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Nov. 2, 2023 © Leeham News: High over Montana, Andy “Jeeves” Barry slipped the McDonnell Douglas DC-8 to the right and out of the Boeing 737-10’s wake to “get some fresh air.”
NASA’s uses a highly-modified McDonnell Douglas DC-8 as a test platform for its Armstrong Flight Research Center. (Photo by Dan Catchpole)
After a few minutes, the NASA research pilot edged the DC-8 behind the MAX, trailing about a mile and a half or so. It was another in a slew of test flights in October that he’d spent riding the 737’s bumper in NASA’s venerable DC-8 research aircraft.
The former U.S. Navy aviator eased the workhorse into a slot of calmer air in the 737’s wake, he said. “…[I]n that sweet spot of that secondary (wake) and just above the primary wake is where we lived the whole time and got the best science that they really loved the entire time we were out there.”
NASA and Boeing collaborated on the flights to test the effect of sustainable aviation fuels (SAF) on the formation of contrails, short for condensation trails, which climatologists contribute to global warming. The 737-10 alternated between burning jet fuel and 100% SAF, while the DC-8 sampled the air in its wake.
Summary
- Researchers say data collected will help predict when and how contrails form and SAF’s effects on contrails.
- How much contrails contribute to global warming is not completely clear.
- Boeing is working with supply chain to develop airplanes that can fly 100% SAF and traditional jet fuel by 2030.
Safran revenues take flight, but supply chain woes persist
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By Gordon Smith
Oct 31, 2023, (c) Leeham News: Robust demand in the civil aftermarket sector has helped propel Safran Group’s Q3 2023 revenues upwards. The French firm shared its latest sales results on October 27 and confirmed that it was on track to achieve its year-end targets – but the positive performance hasn’t been universal.
A choppy combination of headwinds and tailwinds is currently buffeting the business, whose vast range of interests includes engine development, aftermarket, aircraft interiors, and other MRO-related sectors.
Overall, revenues were up 20.1% year-on-year at €5.82bn, tracking estimates of €5.79bn. As a result, the company reiterated its FY23 adjusted revenue guidance of €23bn, which was raised at the end of July.
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MTU posts upbeat earnings report despite €1bn GTF hit
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By Gordon Smith
Oct. 30, 2023, (c) Leeham News: MTU Aero Engines has confirmed its guidance for 2023 and posted higher adjusted sales and earnings in the third quarter. The numbers are the first reported by the German company since it revealed last month that it would take a €1bn knock from the Geared Turbofan (GTF) inspection program.
The exceptional charges dragged the engine manufacturer into the red with an EBIT loss of €410m for the first nine months of 2023. The comparative earnings figure for last year was €331m, representing a sharp 224% fall.
In September, the firm said well-documented powder metal issues with the Pratt & Whitney PW1100G-JM GTF would knock revenue and earnings for the year by around €1bn. During an earnings call on September 27 attended by Leeham News, MTU CFO Peter Kameritsch said he expected this figure to be slightly above the €1bn mark. Without adjustments, revenue was €3.7bn for the first nine months of 2023. Adjusted operating profit was €597m, up a third from the €448m posted a year earlier.
Commenting on the latest numbers, CEO Lars Wagner said: “MTU posted organic growth in all business segments. However, exceptional charges for the Geared Turbofan inspection program affected our figures.”
Adjusted net profit reached €138m, up from €113m a year earlier. Adjusted EBIT – which is the company’s chosen profitability metric – grew to €192m from €158m, representing a margin of 12.7%. Kameritsch acknowledged that “favorable exchange rate effects” provided a welcome boost to the numbers, alongside the company’s “positive revenue mix and a good cost base”.
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Bjorn’s Corner: New aircraft technologies. Part 36. Prototype manufacturing and Testing
By Bjorn Fehrm
October 27, 2023, ©. Leeham News: We are discussing the different design phases of an airliner development program. After covering Conceptual, Preliminary, and Detailed design (Figure 1), we now discuss prototype manufacturing and testing, where we today go deeper into structural testing.
Figure 1. The development plan for a new airliner. Source: Leeham Co.
Further developments of the A321, Part 4
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By Bjorn Fehrm
October 26, 2023, © Leeham News: We do an article series about what can be the next development for Airbus’ most popular aircraft, the A321neo. We looked at a minimal makeover in Part 3; now, we make a larger change.
We use our Airliner Performance and Cost Model (APCM) to examine what a new wing and revised engines can bring regarding larger passenger capacity, range, and lower seat-mile costs.
Summary:
- To increase the capacity significantly of the A321, a new wing is needed.
- We design a new wing combined with uprated engines and look at the result.
Boeing Cuts 737 Delivery Estimate in Blood Red 3Q Earnings Report
By Dan Catchpole
October 25, 2023, © Leeham News: Boeing slashed its 737 MAX delivery forecast for the year to between 375 and 400 in its third quarter earnings report on Wednesday. The company attributed the cut to rework and inspections to fix manufacturing problems in aft pressure bulkhead sections produced by beleaguered supplier Spirit AeroSystems. It maintained its 787 delivery forecast of 70 to 80 airplanes by year’s end.
Boeing recorded a loss of $1.6bn in the third quarter, its worst quarterly performance this year. The company continues to struggle with supply chain and production problems. Boeing’s defense division spilled the most red ink on the ledger book due to problems on its Air Force One (VC-25B) program and losses on a satellite contract. BDS recorded a $924mn loss. Boeing executives acknowledged that the company’s recovery is taking longer than they had expected, but they remained upbeat about stabilizing the aerospace giant in the next couple years.
Summary:
- Boeing reports worst quarterly earnings since 3Q in 2022, when it recorded $3.3bn in losses.
- Boeing Defense, Space and Security recorded a $428mn loss on its Air Force One (VC-25B) program and a $315 million loss on a satellite contract.
- The company continues to struggle with supply chain problems and slower-than-expected rework on the 737 program.
- Boeing CEO says losses are a sign of the company’s commitment to a transparent culture and uncovering, rather than ignoring, problems.