Leeham News and Analysis
There's more to real news than a news release.
Boeing ekes out positive cash flow; earnings numbers mixed; R&D spend jumps
July 27, 2022, © Leeham News: Boeing today reported that it eked out positive operating cash flow for the second quarter of $81m. Revenues his $16.68bn, down slightly from $17bn a year earlier as production and delivery delays continue to hammer the commercial division.
Boeing reported an operating profit of $774m and a net profit of $160m. This compares with $1bn and $567m respectively. Despite the lower earnings figures, the tiny positive cash flow compares with a negative cash flow of $493m last year.
For the half, Boeing reported revenues of $30.67bn vs $32.2bn, an operating loss of $395m vs an operating profit of $940m, and a net loss of 1.1bn vs a net profit of $6m.
The full press release may be obtained here.
ATR, Embraer, JADC release 20-year turboprop demand forecasts
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By Scott Hamilton
July 25, 2022, © Leeham News: ATR and Embraer released at the Farnborough Air Show their forecasts for the next 20 years for turboprops.
ATR is the only remaining manufacturer of turboprops in the 40-80 seat category outside of China and Russia. Embraer, which got its start in commercial aviation with the 19-seat Bandeirante, exited the turboprop business after the EMB-120 Brasilia. Now, following decades of exclusively supplying regional jets to the world’s commercial aviation market, wants to resume producing turboprops. It’s proposed a two-member family with 70 and 90 seats. EMB claims it has interest from airlines for 250 turboprops, but the program launch remains elusive.
Pontifications: Boeing gets boost from Farnborough; now, it must deliver
July 25, 2022, © Leeham News: Boeing announced last week during the Farnborough Air Show orders and commitments for 278 737 MAXes, nine 787s, and two 777-8Fs.
By Scott Hamilton
Now, Boeing must deliver. Some of the 737 delivery positions in earlier orders were promised to begin in 2023. Some in the Farnborough orders are promised from 2025. These early delivery positions are one of the reasons (but not the only, to be sure) that Boeing has won some 1,000 MAX orders since the plane was recertified in November 2020.
But Boeing struggles to bump its MAX production rate. Officials hoped to hit a rate of 31/mo early this year. Boeing hasn’t confirmed a report that it hit rate 31 only this month. Confirmation may come during the Boeing 2Q2022 earnings call on Wednesday. Delays from the supply chain hurt Boeing’s ability to ramp up. With a projected production ramp up to 52/mo by 2025 (the pre-grounding level in March 2019), the question is whether the supply chain will be able to meet Boeing’s schedule.
Boeing Defense labor union rejects contract, authorized strike Aug. 1
July 24, 2022, © Leeham News: The labor union representing Boeing workers at three plants in and near St. Louis (MO), the company’s defense operations, voted “overwhelmingly” to reject a new contract. The members of IAM District 837 voted to authorize a strike at 12:01 AM on Aug. 1.
The union leadership did not release the vote totals for the contract and separate strike authorization votes, leaving no way to verify the outcome or the margin.
Farnborough Air Show winds up with post-pandemic slow pace
By Scott Hamilton
July 22, 2022, © Leeham News: The Farnborough Air Show produced little in the way of headline news. But Boeing comes away with some momentum. Airbus announced a big order on July 1, well ahead of the show, from China, leaving show orders in high double digits.
Boeing announced orders and commitments for 278 737 MAXes, including 100 firm and 30 options from Delta Air Lines. This order was the first from Delta in 11 years, ending a long-running behind-the-scenes streak of sour relations between the companies.
The order, for the 737-10 MAX, finally fulfills Boeing’s goal of getting the -10 into Delta. Boeing had counted on Delta being a launch customer of the airplane in 2017. As reported in my book, Air Wars, The Global Combat Between Airbus and Boeing, the bake-off between the MAX 10 and the Airbus A321neo came down in favor of the MAX 10. But CFM declined to grant Delta TechOps rights to perform maintenance, repair and overhaul for other airlines and lessors. Pratt & Whitney agreed, tipping the order to Airbus.
Also during the competition, Boeing was engaged in a trade complaint over Bombardier’s sale of the C Series to Delta. Boeing alleged Bombardier engaged in price-dumping, contrary to trade laws. Boeing won the trade complaint and a tariff of 292% was assessed on each C Series imported from Canada. However, the final review found no harm to Boeing, which hadn’t competed for the order, a required element to impose the tariff. Many observers thought Boeing’s timing concurrent with the MAX-neo campaign affected the decision. But as reported in Air Wars, Delta officials said this wasn’t a factor.
Bjorn’s Corner: Sustainable Air Transport. Part 29. Lift + Cruise VTOLs.
By Bjorn Fehrm
July 22, 2022, ©. Leeham News: We analyzed vectored thrust VTOLs last week, like Joby Aviation’s Joby S4. Now we look at VTOLs that separate vertical and forward flight thrust generation into two different systems. Typical exponents are Wisk Aero Cora, Beta Technologies Alia-250, and Embraer’s EVE.
Figure 1. Wisk Aero Cora. Source: Wisk Aero.
Airbus prepares contrail flight tests
July 21, 2022, © Leeham News at Farnborough Air Show: Airbus is converting two Arcus high-altitude gliders to check if the contrails produced by hydrogen combustion engines create an environmental problem.
The background is that experts can’t agree if the water vapor produced by hydrogen combustion (which merges hydrogen with oxygen to water) can cause global warming or not. The only way to resolve the dispute and gain fundamental knowledge is to fly and measure.
Figure 1. First flight with the Blue Condor program’s test aircraft. Source: Airbus.
The future small twin-aisle market
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By Vincent Valery
Introduction
July 21, 2022, © Leeham News: As outlined in the previous article, there are now only 46 orders for twin-aisle aircraft seating 250 or fewer passengers in long-haul cabin configuration (39 Boeing 787-8s and seven Airbus A330-800s). After adjusting for orders at risk, the tally is 28.
However, there are more than 700 older-generation aircraft in service in this segment. The lack of airline and lessor orders points to an inadequate OEM offering. Boeing is not eager to build 787-8s due to the lack of commonality with the other Dreamliner variants. Airbus’ A330-800 has meaningfully worse economics than the -900.
Among the several aircraft concepts Boeing is currently studying, a twin-aisle aircraft with up to 5,000 nautical miles nominal range for this market segment is among them.
LNA analyses in this article the addressable market for small twin-aisle aircraft.
Summary
- The addressable replacement market;
- New order opportunities;
- The impact of growth assumptions;
- Substitution effects and freighter market.
Few orders at Farnborough Day 3
By Alex Derber
(c) Airfinance Journal, July 20, 2022
The Farnborough Air Show is all but over with a few orders announced on Day 3. Airbus executives have now left the show, with no more orders expected from them.
Basking in Farnborough rebound, Boeing faces contract rejection at Defense unit
By Scott Hamilton
July 20, 2022, © Leeham News: While Boeing is basking in an upbeat Farnborough Air Show with sizable orders for the 737 MAX, it faces the prospect of losing a key contract vote on July 24 with the International Association of Machinists Local 837.
Local 837 represents Boeing workers in St. Louis (MO), where the Defense unit is headquartered. Union leadership recommended rejecting the contract, opening the door to a potential strike. Nearly 2,500 union members are eligible to vote on the contract offer from Boeing. The current contract expires at 12:01 AM St. Louis time on July 25.