Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Engine makers emphasizing durability, reliability June 4, 2025
- Boeing CEO: Lessons learned are key to certification of 737-7/10 and 777X June 2, 2025
- Digital twin is a key to JetZero’s hopes for Blended Wing Body entry June 2, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 24. May 30, 2025
- Does an A220-500 need a new wing and engines? Part 3. May 29, 2025
JetZero sees big sales potential, but consultants say it won’t be them to bring BWB to market
By Scott Hamilton
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JetZero Z4 commercial BWB and USAF tanker concepts. Credit: JetZero.
Feb. 10, 2025, © Leeham News: There will be a surge in aircraft replacement requirements as today’s Airbus A320neos and Boeing 737 MAXes age. Simultaneously, the seating capacity of aircraft is increasing, says Michel Merluzeau, the Head of Sales Engineering and Market Development for the start-up company JetZero.
JetZero is developing the first commercial blended wing body (BWB) aircraft, a 250-plus seat design with a goal of reducing fuel consumption by 50% over the remaining Boeing 767s and Airbus A330ceos still in operation.
Merluzeau joined JetZero last year after decades as a consultant in commercial and defense aerospace sectors. He spoke last week to the annual conference of the Pacific Northwest Aerospace Alliance in a Seattle suburb.
The replacement forecast and the up-gauging will open a replacement market for at least 7,000 aircraft, Merluzeau said, for which JetZero’s Z4 concept is designed.
Bjorn’s Corner: Air Transport’s route to 2050. Part 8
By Bjorn Fehrm
February 7, 2025, ©. Leeham News: We do a Corner series about the state of developments to replace or improve hydrocarbon propulsion concepts for Air Transport. We try to understand why the development has been slow.
We have covered the progress of battery-based aircraft and hybrids, where the last Corner was about the most sensible hybrids, the mild hybrids. Now, we turn to hydrogen-fueled alternatives.
Figure 1. The operation of a PEM fuel cell. Source: NASA.
Hopes, skepticism, for Boeing from suppliers
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By Scott Hamilton
Feb. 6, 2025, © Leeham News: Hope and skepticism for Boeing permeated the sidelines of a suppliers’ conference this week in the Seattle area as the big manufacturer struggles to regain footing following six years of back-to-back-to-back crises.
Boeing’s CEO Kelly Ortberg said on Jan. 28 that the company is on a path with the Federal Aviation Administration to achieve a production rate of 38/mo for the 737 MAX later this year. Afterward, rates would increase in increments of 5/mo every six months. At this rate, production won’t return to the pre-MAX grounding production of 52/mo until the fall of 2027.
But suppliers at the annual Pacific Northwest Aerospace Alliance (PNAA) conference this week interviewed on the sidelines think Boeing won’t hit rate 38 until late next year. If Boeing then could ramp up in increments of 5/mo thereafter, the pre-grounding production rate would be achieved in the fall of 2028, nine years after the MAX was grounded.
Suppliers think the ramp up rate is also optimistic.
Ihssane Mounir. Boeing photo.
But at the PNAA conference, Ihssane Mounir detailed Boeing’s new approach to the supply chain, safety and quality Boeing has adopted since the grounding and after the Jan. 5, 2024, accident involving a door plug separation from an Alaska Airlines 737-9 MAX. Mounir is the Boeing Commercial Airplanes (BCA) senior vice president of Global Supply Chain & Fabrication.
The same suppliers who are skeptical of the ramp plans express hope and optimism of BCA’s plans to return to normalcy.
A few also expressed residual anger toward Boeing over the six years of lurching from one crisis to another that disrupted business.
One supplier noted that it received no tooling orders for years because of the disrupted production and the absence of a new airplane program.
ATI 2024 results beat low expectations
By Karl Sinclair
Feb. 4, 2025, © Leeham News: “Expectations were low for ATI after a mix of operational and timing issues weighed on results in 3Q2024,” wrote the aerospace analyst for JP Morgan. “So a solid beat in the quarter and a better than feared guide was enough to drive significant out-performance on the day. While this quarter’s results represent a step in the right direction, we think solid execution on an ascending earnings profile for this year can do more the stock from a valuation perspective and would provide a strong jumping off point for out-year earnings, where our estimates are little changed.”
ATI’s fourth quarter ended on Dec. 31.
ATI (formerly Allegheny Technologies Incorporated) is an aerospace manufacturer headquartered in Dallas (TX) which produces specialty materials for the aerospace industry.
ATI is part of the aerospace supply chain, which has recently been under pressure and has not escaped the ravages of the Boeing troubles or the effects of the pandemic.
In 2020, ATI’s Albany (NY) operations temporarily closed down and was permanently shuttered in 2022. The plant produced high-quality titanium, with the bulk of production being purchased by Boeing.
The corporation is organized into two divisions: High Performance Materials & Components (HPMC) and Advanced Alloys & Solutions (AA&S).
Aerospace and Defense dominates company revenues (62% in 2024, up from 59% in 2023), with products for commercial jet engines accounting for 33% of total company sales (up from 32%). Components for commercial airframes are the next largest market for the company, with 18% of revenues.
On July 1, in a planned succession, former COO Kimberly A. Fields took over the reins as CEO from Robert S. Wetherbee, who became Executive Chairman.
Boeing Deferred Production Costs: $39bn since 2019 MAX grounding, $22bn for 737
By Karl Sinclair
Feb. 04, 2025, © Leeham News: The Boeing Company (BA) released its 2024 FY Annual Report this week and as expected, it was awash with red ink.
On the Jan. 28, 2025, earnings call, CFO Brian West had this to say, in reference to a question regarding the inventory build-up:
“In terms of the inventory, we’ve got $87.5bn worth of inventory in the company right now…. So that is the big cash flow benefit that we’re going to see over the next couple of years-ish and it’s all because we’ve been sitting on this big investment that we look forward to having unwind with deliveries, and that’s what we’re focused the team on out in Seattle.”
Indeed, the balance sheet does indicate a figure of $87.55bn sitting in the Inventory account, but what is the detailed break-down of what is contained therein?
The recent five-month certification stoppage on the 777X program, due to the thrust-link breaks, forced Boeing to take a charge on the program in 2024 of $3.499bn This is in addition to the $6.493bn reach-forward loss taken on the 777X in 2020.
Along the way, Boeing has also recorded “abnormal production costs”. In 2023 and 2022 the program wrote off $513m and $325m, respectively.
For those keeping track, this is $10.83bn in losses for the variant, without having delivered a single aircraft to an airline or lessor.
Related Story
It is a recurring problem for Boeing and one that traces all the way back to when it started using program accounting to report earnings.
Boeing FY 2024: Capital raise, debt, order cash advances helped Boeing avoid running out of cash in 4Q
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By Karl Sinclair
Note: Boeing has not released its Securities and Exchange Commission filing (10-K) for the full year. Much of the analysis contained herein is based on press releases and previously filed statements, exact figures being unavailable and noted as such. A section of the analysis will also be based upon comments by CEO Kelly Ortberg and CFO Brian West, taken from the Jan. 28 earnings call. LNA reached out to Boeing and was told that the annual report was to be filed later today.
Feb. 3, 2025, © Leeham News: Financial documents reveal that The Boeing Company (BA) needed to make some very astute financial moves during 2024 to avoid running out of operating capital in the fourth quarter.
It did so by tapping into three sources: lenders, investors, airlines, and lessors (purchasers).
At the end of 2023, Boeing indicated on its Consolidated Statement of Cash Flows an ending balance of $12.691bn in cash and equivalents as of December 31, 2023.
Free cash flow (FCF) for 2024 was ($14.31bn), with ($4.098bn) used in 4Q2024 alone.
If Boeing does not make these moves, then cash burn ($14.31bn) will outstrip cash and equivalents of $12.691bn in the fourth quarter, and Boeing must dip into its revolving line of credit.
Boeing needed capital, and it needed it fast.
Bjorn’s Corner: Air Transport’s route to 2050. Part 7.
By Bjorn Fehrm
January 31, 2025, ©. Leeham News: We do a Corner series about the state of developments to replace or improve hydrocarbon propulsion concepts for Air Transport. We try to understand why the development has been slow.
We have covered the progress of battery-based aircraft and hybrids, both serial and parallel hybrids. A couple of mild hybrids have a larger chance of success than the ones we described. We will look into these and then start looking at different hydrogen-fueled alternatives.
Figure 1. The LEAP-1A with auxiliary gearbox. Source: Safran Transmissions.
Boeing sees achieving pre-MAX grounding production rates 8 years later
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By Scott Hamilton
Jan. 30, 2025, © Leeham News: When Airbus began to record more orders than Boeing in the early 2000 decade, Boeing’s CEO dismissed the shift.
Orders didn’t matter, sniffed Phil Condit. Only deliveries mattered. The statement ignored the obvious: if you didn’t have orders, you wouldn’t have deliveries.
For much of the past two decades, Airbus has been delivering more airplanes than Boeing. According to both companies’ forecasts, this trend will continue in the heart of the market in the coming years by a wide margin.
Deliveries of the 737 MAX are key to Boeing’s financial recovery. The cash flow and profits from the MAX line will drive Boeing’s ability to develop a new airplane. (This does not ignore the necessity of Boeing’s defense unit to get its financial house in order.)
Kelly Ortberg, Boeing’s CEO, appeared on the financial news network CNBC this week and said Boeing hopes to return to a production rate of 38/mo in the second half of this year.
“I’m not going put a date on when we need to get to rate 38 and get approval for the FAA to go beyond,” he said. “It’s more important that we do this right; we have a stable production system, we get through that, and I expect by the second half of the year, we’ll have that approval, and we’ll be moving to a higher production rate.”
Rate breaks in 5 every six months
Ortberg added, “Well, we’re planning to be at about 38 a month for the balance of this year, ramping up, and we’ll go in five-step increments every six months after that. On 787, we’re at five a month rate, moving to seven a month rate…hopefully, that’s in the next quarter or so.”
The 737 data can be extrapolated to suggest Boeing will return to the pre-MAX grounding rate (52/mo) in the first half of 2027. (Others are skeptical, and the ramp-up appears aggressive.) This would be eight years after the MAX was grounded on March 10-13, 2019, for what turned out to be 21 months.
Boeing was on its way to a rate of 57/mo by the end of 2019. Under the Boeing plan, this rate won’t be achieved until the end of 2027. If Boeing still believes demand supports this rate, a higher rate of 63/mo that was planned pre-grounding would follow in 2028.
Airbus will also increase its production rate. Production and delivery forecasts appear to place Boeing at a permanent distant second to Airbus as long as the competitors are the A320neo and 737 MAX.
Ortberg sees path with FAA for returning to full rate 737 production
By Karl Sinclair
Jan. 28, 2025, © Leeham News: Boeing’s CEO Kelly Ortberg, now five months into his job, painted an encouraging picture of the company’s path to recovery in an appearance on the financial news network CNBC before the 2024 full-year earnings call.
Kelly Ortberg, CEO of Boeing. Credit: Boeing.
Ortberg said there is a path for Boeing Commercial Airplanes to win approval from the Federal Aviation Administration (FAA) to return this year to a production rate of 38/mo for the 737 MAX. This is the rate before the Jan. 5, 2024, accident involving an Alaska Airlines 10-week-old MAX 9 in which a door plug blew off the airplane at 14,000 ft after take off from Portland (OR). The accident was traced to a production failure by Boeing. Nobody died, and the injuries were minor. The plane safely returned to Portland for an emergency landing.
Since then, production has trickled along at 20 or less per month. Returning to a rate of 38 and growing beyond is critical to Boeing’s financial recovery.
Ortberg told CNBC this path appears to be on track finally.
RTX 2024 Earnings: Pratt Progress on GTF AOG and MRO While Preparing to Seize the Advantage; Collins Battles BFE Supply-Chain
By Chris Sloan
January 28, 2025 © Leeham News: RTX chief executive Christoper T. Calio says the company’s number one priority is executing on its $218 bn backlog and meeting its commitment to customers – topped by the Geared Turbo Fan program. MRO and Original Equipment momentum has gathered pace in the last year since the powdered metal saga began two years ago.
“AOGs[Aircraft On Ground] have been stable. MRO output is the key enabler. PW1100 output was up 30% last year. So, very good, good progress in terms of material flow and in-shop performance,” he proclaimed. Pratt’s goal of 30% growth in 2025 will be governed by the supply chain – particularly powdered metal. The company didn’t disclose current AOG numbers – which have been up to 30% of the fleet, with protracted durations of up to a year commonplace.