Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- The Boeing 767 Cross Section, Part 1 November 24, 2022
- Movie Review: Devotion November 21, 2022
- China will accelerate development of its commercial aerospace sector November 21, 2022
- Bjorn’s Corner: Sustainable Air Transport. Part 46. eVTOL comparison with helicopter November 18, 2022
- The economics of a 787-9 and A330-900 at eight or nine abreast November 16, 2022
Update 2: (Boeing modifies offer, strike called off for now) After upbeat air show and 2Q financial report, Boeing faces strike Sunday
Update, 2:45PM (PDT) July 30: Overnight negotiating resulted in a modified offer from Boeing to IAM 837, resulting in postponing the strike set to begin at 12:01 AM CDT Aug. 1. A new vote has been set for Aug. 3.
By Bryan Corliss
Analysis
UPDATE: 4 p.m. (Pacific), July 29: On Friday afternoon, a St. Louis television station reported that Boeing and Machinists Union District Lodge 837 were heading to mediation. The station quoted an IAM 837 spokesman who said a federal mediator would lead the talks. The station said Boeing has not confirmed this.
Meanwhile, the St. Louis Business Journal reported that negotiators on both sides had met with a mediator but made no progress.
Neither side has issued a statement on potential mediation.
We will update if developments warrant.
July 30, 2022, © Leeham News: Boeing’s Wednesday earnings call had some pretty big news in it: After years of red ink, Boeing now anticipates generating free cash flow.
But there’s a big potential blocker on the Defense side of the house, in the form of a looming strike with the Machinists Union workers in St. Louis.
Workers rejected a contract on July 24. Leaders of International Association of Machinists District Lodge 837 said 91% of those voting rejected Boeing’s “best and final” offer, and 94% of voters authorized a strike, which could begin at 12:01 AM Monday. The leadership did not release the vote totals.
Three plants in and near St. Louis would be affected by a walk out.
Boeing didn’t mention it in its earnings press release, and CEO Dave Calhoun didn’t mention it on the earnings call and downplayed the significance of the labor strife during a live interview with CNBC the same day.
“They do have high expectations,” Calhoun said. “We feel we have made a very strong offer.”
The union workers, however, disagree, and that could very well mean another stumble for Boeing, as it moves to bring the key new programs – the T-7A trainer for the U.S. Air Force and the MQ-25 Stingray UAV for the U.S. Navy – into full production.
Bjorn’s Corner: Sustainable Air Transport. Part 30. Lilium Jet VTOL.
By Bjorn Fehrm
July 28, 2022, ©. Leeham News: This week, we analyze the Lilium Jet VTOL.
It’s a vectored thrust design, but it’s different enough in its characteristics from the vectored thrust VTOLs we looked at in Part 28 (Joby S4 ..) to motivate a separate article.
Figure 1. The final Lilium Jet configuration transports six passengers plus a pilot. Note the changed number of wing jets (from 24 to 20). Source: Lilium.
HOTR: Hexcel gives glimpse at 2030 airplane
By the Leeham News Team
July 28, 2022, © Leeham News: Hexcel, a major supplier of composites to Airbus and Boeing, gave a hint of things to come when the next generation narrowbody airplane is developed for late this decade or early next decade.
In its 2Q2022 earnings call, Hexcel forecast that the next-gen airplane may be comprised of more than 60% of composites and thermoplastics. (Figure 1.) This compares with about 50% for the Airbus A350 and Boeing 787. It compares with about 5% of the narrow- and widebody airplanes of the 1970s and 1980s.
Upping composite content in single-aisle airplanes and achieving economic operating gains is more difficult than the gains for widebody aircraft. The weight savings and stage lengths simply don’t match the benefits achieved on widebodies.
Nevertheless, Hexcel’s presentation presents an intriguing look into the future.
Dual or Single Aisle for Long Haul, Part 2
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By Bjorn Fehrm
Introduction
July 28, 2022, © Leeham News: Two weeks ago, we started looking at the most economical way to fly long-haul. The single-aisle alternative or stay with the trusted widebody?
We laid out a route on the practical range limit for an Airbus A321XLR, Milano to New York. With typical headwinds (as we fly west), it’s close to 4,000nm for the aircraft. The first analysis was for fuel burn. Now we add other costs to form Cash Operating Costs.
Summary
- The fuel burn points one way, the Cash Operating Costs another.
- The background is different costs scale differently with size.
Airbus 1H profit; delays A320neo production rate hike due to supply chain challenges
July 27, 2022, © Leeham News: Airbus Group today reported flat revenues for the first half, year-over-year but less profit.
Revenues for the six months this year were €24.8bn vs €24.6bn. Net income was €$1.9bn vs €2.2bn, a decline of 15%. Free cash flow was €1.65bn vs €2bn. The Group ended the second quarter with €7.2bn in cash, down from €7.7bn a year earlier. Total liquidity was €27.6bn.
Airbus said it still has a goal of producing 75 A320neos a month by 2025 but that it will adjust the ramp-up rate between now and then. Challenges with the supply chain slow the ramp up. Airbus now targets early 2024 for a rate of 65/mo, vs the second half of next year, a six-month delay. Entry into service for the A321XLR is now targeted for early 2024 vs 2023. Increasing production rates for the A330 and A350 depend on the supply chain, the company said.
Boeing has slowed the production rate ramp-up for the 737. It now will maintain a rate of 31/mo for the remainder of this year, also citing supply chain challenges. It had planned to increase production to 38/mo later this year.
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.