Leeham News and Analysis
There's more to real news than a news release.
Boeing’s product move kills direct 767F replacement, puts 787F in doubt
By Scott Hamilton
Nov. 4, 2022, © Leeham News: David Calhoun’s decision to tank all-new airplane development kills the direct replacement for the Boeing 767-300ERF that was under development. It also places in doubt the development of the 787F.
Calhoun, the CEO of Boeing, said on Nov. 2 that Boeing won’t launch any new airplane until the mid-2030 decade.
Will Boeing’s cancellation of all new airplane development until the next decade breath new life into the 767-300ERF? It might. Source: Leeham News.
Boeing’s Product Development (PD) department was working on a 767-sized airplane that would begin with the freighter. For lack of a better term, we’ve called it the NMA-F in previous articles. The NMA-F would then be followed by passenger models for a full family of airplanes.
PD was also working on a derivate freighter for the 787, the 787F. Internally, the two teams were competing, as is Boeing’s process.
Killing all new airplanes kills the NMA-F. Funding for the 787F has been reduced, LNA is told. But there is no assurance that the 787F will be launched. If it is, as a derivative its launch would not be considered a “new airplane” program.
Although not the principal reason for Calhoun’s move, killing the NMA-F and casting doubt over the 787F may help Boeing in its effort to exempt the 767 from stringent standards adopted in 2017 by the International Civil Aviation Organization (ICAO). The Federal Aviation Administration announced earlier this year it plans to adopt the ICAO standards. The emissions standards cannot be met by the 767. (Nor could the 777 Classic freighter, the 777-200LRF, meet them. Boeing launched the 777-8F program which will meet the standards.)
Under the ICAO standards, production of the 767-300ERF (and 777-200LRF) must cease from 2028. Boeing already seeks an exemption should the FAA’s plan become US policy.
Bjorn’s Corner: Sustainable Air Transport. Part 44. eVTOL operating costs.
By Bjorn Fehrm.
November 4, 2022, ©. Leeham News: This is a summary of the article Part 44P, eVTOL operating costs. It discusses the operational costs of a typical eVTOL flying a feeder mission from a city center to an airport.
The dominant cost factors are not the ones eVTOL companies love to discuss, like the electricity bills.
Figure 1. The Vertical Aerospace VX4 in an early rendering with similar looks to the eVTOL we discuss. Source: Vertical Aerospace.
Bjorn’s Corner: Sustainable Air Transport. Part 44P. eVTOL operating costs. The deeper discussion.
Subscription required
By Bjorn Fehrm
November 4, 2022, ©. Leeham News: This is a complementary article to Part 44, eVTOL operating costs. It discusses the typical operating costs we can expect from an eVTOL when used in an air taxi operation.
Despite the operation of such transports being years off, an eVTOL has dominant cost factors that can be estimated today.
UPDATE: Spirit close to breakeven in a ‘dynamic’ environment, CEO says
By Bryan Corliss
Nov. 3, 2022, (c) Leeham News: Spirit AeroSystems said today its third quarter revenues grew by 30% year-over-year, driven by an increase in deliveries for Boeing’s 737 MAX program.
The company posted positive operating income of $4.5 million for the quarter – its first positive income since 2019 – but reported an overall net loss it said was due mainly to charges connected with the cost of terminating an employee pension plan.
Spirit said it delivered 69 Boeing 737 shipsets during the third quarter — 23 a month — compared to 47 shipsets in third quarter 2021.
Boeing deliveries are expected to be stable at 31 a month for the foreseeable future, Spirit President and CEO Tom Gentile said.
“Given that our production rate is set at 31 aircraft a month on the 737 program now, and we will likely remain at that rate for much of 2023, we are initiating a focused effort to reduce structural costs to enhance our profitability and cash flow in 2023,” Gentile said in the company’s earnings release.
The company faces challenges, however. “We continue to see disruptions in our factories due to part shortages, increased levels of employee attrition and volatile schedules,” Gentile said.
Spirit, which had reduced its quarterly dividend to 1 cent a share in 2020, said it will suspend dividend payments entirely starting in the fourth quarter, “due to the current challenging macroeconomic environment.”
SUMMARY
- Labor and supply chain issues ‘dynamic’
- Spirit to slowly work through 737 backlog
- Defense diversification helps bottom line
- More demand for spares and maintenance
The A350 enhancements, Part 2
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By Bjorn Fehrm
Introduction
Nov. 3, 2022, © Leeham News: Last week, we described the New Production Standard (NPS) of the Airbus A350. Now we look at the economic performance of the A350-900 versus the Boeing 787-10 on the world’s busiest long-haul route, London Heathrow to New York JFK.
We compare the economics with a nine abreast economy cabin and what difference the NPS and a 10 abrest change for the A350 produces.
Summary
- The 787-10, with its long fuselage, is seat mile cost-optimized for medium long-haul routes.
- Airbus gives the airline the option with the A350 NPS, comfort, or seat mile optimization.
China still needs Boeing as much as Boeing needs China, despite interminable limbo
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By Scott Hamilton
Oct. 31, 2022, © Leeham News: China needs Boeing as much as Boeing needs China was the conclusion of an analysis by LNA in July 2021. A trade expert last week agreed. Airbus and China’s COMAC won’t be able to fill the future demand forecast for China.
Michael McAdoo, Partner & Director, Global Trade and Investment of the Boston Consulting Group (BCG) in Montreal and a former strategic chief of Bombardier Commercial Aircraft, told LNA in an interview last week that China needs the Boeing 737 MAX and widebody airplanes to meet demand in the near-to-medium term.
It will be long-term before China’s commercial aviation industry will be competitive with airplane designs and production.
Summary
Forecasts for China’s demand for jet aircraft are consistent between Airbus and Boeing. But COMAC, which is the leader of China’s burgeoning commercial aviation industry, is significantly higher in its forecast. The independent Japan Aircraft Development Corp (JADC) is significantly lower.
- Boeing forecasts that China needs 8,485 new jets through 2041.
- Airbus forecasts 8,420 new aircraft will be needed through 2041.
- COMAC forecasts China will need 9,084 aircraft through 2040.
- JADC is more conservative, forecasting a requirement for 6,172 new jets in China through 2041.
Source: Boeing Current Market Outlook.
China will account for 21% of the world’s new aircraft deliveries through 2041, Boeing says.
Pontifications: Analysts overlook Boeing losses for cash flow gain; what’s behind the jump in charges?
By Scott Hamilton
Oct. 31, 2022, © Leeham News: Boeing last week surprised Wall Street aerospace analysts with a huge loss instead of the expected profit for the third quarter.
But positive cash flow was the metric the analysts focused on. The loss was attributed mostly to big write-offs of five defense programs: the KC-46A, VC-25B, MQ-25, T-7A, and Commercial Crew (the Starliner) programs. Boeing wrote off $2.8bn for these programs in the quarter. The company previously wrote off $8.8bn for these programs.
The specifics: Boeing took charges of $1.2bn for the KC-46 tanker, $766m on Air Force One, $351m for the MQ-25 aircraft carrier tanker drone, $285m for the T-7 jet fighter trainer, and $195m for the Commercial Crew.
All are fixed price contracts that have come back to bite Boeing big time.
Boeing also had a loss of $643m in the quarter at Commercial Airplanes. Global Services reported a profit of $733m and Boeing Capital Corp (BCC)—the leasing unit—eked out a $23m profit.
For the nine months, Commercial Airplanes recorded a loss of $1.74bn. Defense lost $3.66bn. Services reported a profit of $2.1bn and BCC barely recorded a profit of $14m.
But cash flow was positive at $2.9bn. And this is what analysts liked. Yet there was a little smoke-and-mirrors involved in this. Boeing said the cash flow was helped by “higher commercial deliveries, favorable receipt timing, and a tax refund,” as analyst Robert Stallard of Vertical Research put it. The tax refund was $1.5bn, a huge chunk of the cash flow touted by Boeing.
Mammoth, NIAR settle lawsuit with prejudice
By Scott Hamilton
Oct. 28, 2022, © Leeham News: A settlement has been reached between the Mammoth Freighters and other plaintiffs and NIAR, the aerospace research arm of Wichita State University, it was announced today.
“This agreement now concludes all existing litigation between NIAR and Wagner/Mammoth, without any payment from either party or restrictions on NIAR, its personnel, its customers or partners, or its conversion aircraft program going forward,” NIAR/WSU said in a statement. The court filing dismissing the lawsuit says each side bears its own costs.
Airbus 9 months 2022 results: Widebody demand picking up
By Bjorn Fehrm
October 28, 2022, © Leeham News: Airbus presented its results for the first nine months of 2022 today. Airbus’ problem is how to fulfill demand as the supply chain is still recovering from COVID.
The deterioration of supply chain performance has stopped, according to Airbus CEO Guillaume Faury, but not improved. Performance is now steady but at a lower level than Airbus needs. The planned rate increases in single aisle and widebody are unchanged, but in addition to planned increases in single aisle, discussions have started with the supplier base on how to increase production of widebodies as demand has picked up.
Airbus delivered 437 commercial aircraft in the first nine months, compared with 424 last year. Guidance for the year is unchanged at 700 deliveries and €5.5bn EBIT, except for Free Cash Flow, which will increase to €4.5bn due to a strong dollar.
Bjorn’s Corner: Sustainable Air Transport. Part 43. eVTOL IFR range.
By Bjorn Fehrm
October 28, 2022, ©. Leeham News: This is a summary of the article Part 43P, eVTOL IFR range. It discusses the range of a typical eVTOL flying a feeder mission from a city center to an airport during IFR conditions.
IFR conditions mean we have a dicey weather forecast for our airport destination and must plan with an alternate landing site where the weather forecast is better.
Figure 1. The Vertical Aerospace VX4 in an early rendering with similar looks to the eVTOL we discuss. Source: Vertical Aerospace.