Leeham News and Analysis
There's more to real news than a news release.
Spirit gearing up to produce 42-a-month on 737 program by the end of 2023
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By Bryan Corliss
Feb. 8, 2023, © Leeham News – Spirit AeroSystems plans to deliver 42 new-built 737 MAX fuselages a month to the Boeing Co. by the end of this year, executives said Tuesday.
Whether that’s how many 737s Boeing is delivering to customers is not for Spirit to say, CFO Mike Suchinksi told analysts during the company’s year-end earnings call.
“What Boeing delivers to their customers is, we have no purview. That’s on the Boeing side,” he said. “We’re just trying to communicate to you what the contract schedules have been and what we expect to produce internally and what we expect to ship to Boeing and to get paid for.”
But Spirit and its suppliers still have major challenges to overcome before they can get to those higher rates, Suchinski and CEO Tom Gentile warned. The company, which struggled through a tough year in 2022, is making major cash outlays in early 2023 to acquire the people and materiel it will need to reach those higher rates, and that will weigh on profitability for the next few quarters.
- Losses doubled in fourth quarter
- Outlook: 420 737s and 650 A320s
- Some suppliers in ‘deep distress’
- Spirit hiring, but new workers need time
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‘What kind of vision is that?’ Industry analysts scorch Boeing and CEO Calhoun
By Bryan Corliss
Feb. 7, 2023, © Leeham News – Less than a week after Boeing CEO Dave Calhoun stood in the company’s Everett factory and vowed to “maintain this leadership culture forever,” a panel of top aerospace industry analysts blasted Boeing’s corporate culture and criticized Calhoun’s leadership, saying he lacks vision, industry knowledge – even charisma.
Aerospace analyst Kevin Michaels.
“No new aircraft until 2035,” said AeroDynamic Advisory Managing Director Kevin Michaels. “What kind of vision is that?”
Having Calhoun at the helm of Boeing at this juncture is “the worst-case scenario,” said Michaels’ partner at AeroDynamic, Richard Aboulafia. “(Calhoun) is somebody not only not from this industry, but someone who maintains a willful ignorance of it.”
The challenges Boeing faces mending fences with all the groups it has disappointed or alienated in the past 20 years – customers, suppliers, regulators and workers – are immense and it may be more than one person can handle, said Bank of America Managing Director Ron Epstein, who also was on the panel.
“It’s a hard, hard, hard job right now, to be the president of the Boeing Co.,” Epstein said.
- Panel rips lack of new product development
- Without a new airplane, whole industry is challenged
- Panel: Boeing struggles to retain engineering talent
- Michaels: Suppliers in ‘crisis’
Pontifications: One “good” engine in future for RR, faulty business strategy and model: JP Morgan
By Scott Hamilton
Feb. 7, 2023, © Leeham News: Our report last week about Rolls-Royce’s new CEO characterizing the company in dire straits is just part of the story. Shortly before that, on January 18, JP Morgan issued a 38-page dissection of the company that perfectly encapsulates what LNA has pointed out in the past about its commercial engine business.
Orders at risk: Year-End 2022 snapshot
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By Vincent Valery
Introduction
Feb. 6, 2023, © Leeham News: With the publication of the Airbus and Boeing announcing 2022 orders and deliveries last month, and Boeing’s published its 2022 Annual Report (10-K), we undertake our annual analysis of at-risk deals on their books.
Airbus and Boeing have outstanding orders with airlines where there is a material probability some orders won’t translate into deliveries. Most were the result of airlines encountering financial difficulties, but some were related to contractual disputes. Boeing flags such orders as subject to an ASC 606 accounting rule adjustment.
Unlike Boeing, Airbus isn’t subject to an accounting rule like the ASC 606 adjustments at a program level. Therefore, the European OEM does not break down the orders at risk of cancellation by the program. Airbus only discloses the nominal value of its total adjusted order book in its annual report.
LNA analyzed July 2020, November 2020, August 2021, February 2022, and August 2022 Airbus’ and Boeing’s order books to identify orders at risk and come up with an apples-to-apples comparison. We update this analysis with the latest order books from both OEMs. The above links explain our methodology and its differences with Boeing’s ASC 606 adjustments.
Summary
- Lingering order book cleanup for older programs;
- Improving single aisle order book quality;
- Country-level single-aisle market share
- One order materially affects OEM twin-aisle market share.
Bjorn’s Corner: Sustainable Air Transport. Part 56. SAF non-CO2 effects
By Bjorn Fehrm
February 3, 2023, ©. Leeham News: We’ve gone through the composition of Sustainable Aviation Fuel, SAF, its production, and its cost. We’ve also discussed its effect on CO2 emissions from Air Transport.
An important part of SAF’s advantages is its effect on non-CO2 emissions. It stems from its low content of Sulphur and Aromatic hydrocarbons.
Figure 1. Composition of Jet fuel. Source: CE Delft, Potential for reducing aviation non-CO2 emissions through cleaner jet fuel.
Good news for 4th 737 production line, but lots of unanswered questions remain
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By Scott Hamilton
Feb. 2, 2023, © Leeham News: Boeing’s announcement that it will establish a fourth 737 MAX final assembly line (FAL) at its Everett (WA) widebody plant by the second half of 2024 answers some but hardly all questions.
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The fourth Boeing 737 MAX production line in Everett (WA) will build the MAX 10. Credit: Leeham News.
The news is welcome at the plant, which assembled the 747, 767/KC-46A, 777, and 787. The last 747 rolled off the line last month after 54 years in production. The 787 FAL closed in 2020, and consolidated with the line in Charleston (SC). The 767/KC-46A line is ticking over at 3/mo and the 777 line is at a 2/mo rate—both well below their peaks.
Rework on 110 787s is to be completed by the end of 2024. This rework is moving from the 787 bay to the 747 bay and a building south of the massive assembly building. The 737 line will go into the 787 bay.
The new FAL gives some certainty to workers and the neighboring supply chain, and to Everett and Snohomish County in which the city lies. But there are lots of questions that are unanswered.
Summary
- What will the production capacity of the new FAL be? How long will it take to reach the capacity?
- Where is the tooling coming from?
- How will the 737 fuselages get from Wichita (KS), where they are made?
- How long before all three lines in Renton are to full capacity of 63/mo?
- When does production of the P-8 end? (Put another way, how long is the backlog?)
- Is there any thought to expanding the MAX production someday into the sawtooth building?
Boeing CEO Calhoun vows commitment to innovation as 747 flies into the sunset
By Bryan Corliss
Jan. 31, 2022, (c) Leeham News — Standing in the chilly hangar where 1,574 747s were built, Boeing CEO Dave Calhoun committed the company to continued innovation in commercial aircraft.
“Our commitment as a leadership team at Boeing is to maintain this leadership culture forever,” he said. “We’re committed to it and we will be forever.”
Boeing “continues to have visions just like this one,” the CEO said, gesturing to the last 747. “The hangars are full of innovation.”
Calhoun also thanked everyone who’s been involved with the 747 program in recent years.
“If a company ever needed to stand tall on a legacy it was the Boeing Co.,” he acknowledged. “For the past three or four years it has been tumultuous.”
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Pontifications: New Rolls-Royce CEO paints a dire picture; all scenarios on table at Airbus
By Scott Hamilton
Jan. 31, 2023, © Leeham News: Rolls-Royce’s new CEO says the engine group is a “burning platform,” failing to give returns.
Tufan Erginbilgic, who joined RR as CEO on Jan. 1, said this is the “last chance” to get its house in order and turn a profit.
The dire outlook has potentially disastrous implications for Airbus. The airframer relies exclusively on Rolls for its engines for the A350 and A330neo. Airbus is monitoring the situation closely. Market sources tell LNA that Airbus is assuring customers and potential customers that Airbus will make sure engines and aftermarket support are available, without detailing how.
An Airbus insider tells LNA that all scenarios are under consideration. Some speculate that Airbus might either provide financial support to Rolls or even, in the extreme, buy the engine company. Others believe either course is unlikely because Airbus has its own production problems to sort out. Its fiduciary duty is to its stockholders. “It’s not their job to inherit a problem that was created decades ago,” one London-based analyst says.
What’s at the root of RR’s current problems? Many of the reasons have been discussed before, but let’s summarize them.
Boeing to add 4th 737 FAL at underutilized Everett plant
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By Scott Hamilton
Jan. 30, 2023, © Leeham News: Boeing will establish a fourth final assembly line (FAL) for the 737 in the vast Everett (WA) assembly plant in 2024. The company announced the move internally today.
Boeing Everett plant, where all widebody aircraft are assembled. Boeing will add a narrowbody 737 line. Credit: Everett Herald
The move was one of many rumored for months. Consolidating the 787 FALs in Charleston (SC), a move announced in the early days of the COVID pandemic, and shutting down 747 production, announced two years ago, the future of the big, empty spaces at Everett was a question. When Boeing was studying whether to launch a New Midmarket Airplane (NMA), Everett was on the list for an FAL (as were other places). But when CEO David Calhoun killed this program, more questions arose.
Rework on the 787 temporarily filled the 787 bay and now, part of the 747 space. But this was hardly enough.
LNA has obtained production rate studies Boeing shared with suppliers for the future. Conceivably, the aggressive numbers could be accommodated at the 737 plants in Renton (WA), but there is more to consider than raw production numbers.
Summary
- Boeing has a lot of skilled workers in Everett who are losing their assignments when the 787 rework is completed (target: year-end 2024) and with the cessation of 747 production. These skilled workers need replacement work.
- Boeing needs to keep up with the Joneses (aka Airbus). Boeing is studying very high 737 production rates.
- There is no new airplane program for Everett and a lot of empty space.
- Everett’s overhead absorption rate is now covered by just the 767 and 777 at very low rates and rework.
Repost: Exclusive Interview with Joe Sutter’s grandson as Last Boeing 747 leaves Everett factory
Update, Jan. 30, 2023: The last Boeing 747 will be delivered to Atlas Air tomorrow. Below is the story LNA posted on Dec. 6, 2022, when the airplane was ready to roll out of the Everett factory. In it, we exclusively interviewed the grandson of Joe Sutter, the lead engineer of the 747 design.
Cargo carrier Atlas Air is taking the final 747-8Fs, the last of a legendary line of Boeing jumbo jets./Atlas Air photo
By Bryan Corliss
Dec. 6, 2022, © Leeham News: The final Boeing 747, line No. 1,574, rolls out of Boeing’s Everett factory tonight. The plane was built for Atlas Air, which is scheduled to take delivery in early 2023 – almost 52 years after the first 747 entered service with Pan Am in January 1970.
“It’s kind of a sad occasion,” said Jon Sutter, the grandson of legendary Boeing aircraft designer Joe Sutter, the father of the 747.
Jon Sutter – who now works at Boeing in the same Boeing Field building where his grandfather designed the Queen of the Skies – hadn’t been born when the first 747 flew.
And his grandfather, who passed away in 2016, didn’t live to see the end of the program he’s most closely associated with.
However, even with the end of the 747 program, Joe Sutter’s legacy lives on, his grandson said.
“His baby, Boeing, is still going,” Jon Sutter said in a recent interview with LNA. “You can see his influence in every other plane out there.”
SUMMARY:
- First-flight pilots called it a “two-finger” airplane
- 747 was Plan B after SST was canceled
- Last 747s sport special decal honoring Sutter
- 747 survived the Boeing Bust
- 747-8 was final iteration
- ‘Hard to imagine the world without it’