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
Outlook 2021: Russia and China
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By Bjorn Fehrm
Introduction
Jan. 14, 2021, © Leeham News: China and Russia are both developing a single-aisle domestic airliner in the A320/737 MAX class, a regional turboprop in the ATR 72 class, and is jointly working on an A330neo/787 widebody competing airliner.
While these are similar development programs, the countries are in very different positions in their markets and industries. China is a five times larger market for airliners than Russia, and its airlines are on the way back from COVID riddled passenger numbers. It has the fastest recovery from COVID-19 of any country and its civil airliner industry is on the rise.
Russia on the other hand has a stagnant market, still hit by COVID-19, and its market and industry have become introverted after a decade of flirting with Western markets and technology.
Summary
- China and Russia drive almost identical civil airliner projects to replace Soviet-era and Western airliners.
- While similar in their projects, they are different in their markets and state of industries.
- China is on the way up (albeit from a low state) to eventually compete on the world market, whereas Russia is falling back to a Soviet-style all Russian state-controlled model.
Boeing’s Calhoun completes first year as CEO
By the Leeham News Team
Jan. 13, 2021, © Leeham News: Today marks the first anniversary of David Calhoun becoming CEO of The Boeing Co.
Calhoun’s first year faced challenges unprecedented in Boeing’s history. There was the 737 MAX crisis. Sales of the 777X were stagnant. The balance sheet was stressed.
And then COVID exploded, all but destroying commercial passenger demand and with it, ability by airlines to take delivery of new airplanes.
David Calhoun. Source: CNBC.
Boeing’s balance sheet went further upside down. Production and quality control problems with the 787 emerged.
Finally, Calhoun was afflicted with a case of foot-in-mouth disease. This contrasted with his calm, well-received initial public face during the waning days of then-CEO Dennis Muilenburg’s stilted public persona.
De Havilland to pause production this year after backlog built
By Scott Hamilton
Jan. 12, 2021, © Leeham News: De Havilland Canada will pause production later this year when the current Dash 8-400 backlog is assembled.
According to data reviewed by LNA, there are 17 Dash 8s scheduled for delivery to customers this year. There are two more that don’t have identified customers. It is unclear if these will be built.
DHC notified suppliers to stop sending parts and components to avoid building whitetails.
De Havilland assembled the Dash 8s at the Toronto plant previously owned by Bombardier. The lease on the facility expires in 2023. There is no decision whether to move the final assembly line to Western Canada, where DHC is headquartered.
Pontifications: Boeing’s exodus from Puget Sound
Jan. 11, 2021, © Leeham News: Last week appeared to be an ominous week for Washington State for aerospace.
By Scott Hamilton
On Monday, The Seattle Times reported that Amazon surpassed Boeing as Washington’s largest employer. The retailer now employs more than 80,000 in the state. Boeing, following COVID- and 737 MAX-grounding induced layoffs, employs just under 59,000 in Washington.
The Times reported Tuesday that Boeing’s research and development center at Boeing Field will be closed. At its peak, the center was to employ 900. The expansion began a mere 10 years ago.
Previously, Boeing announced Oct. 1 that it will close the Everett 787 production line and consolidate the final assembly at the Charleston (SC) plant.
The exodus by Boeing from Puget Sound and Washington State is underway. But was closing the R&D center as significant as it seemed?
Outlook 2021: Turboprops challenged
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By Judson Rollins & Bjorn Fehrm
Introduction
Jan. 11, 2021, © Leeham News: COVID-19 may ultimately prove to be a net positive for turboprop manufacturers. Near-term orders will be pinched just as for jets, but a long-term loss of business travel and the resulting impact to airline yields will make turboprops’ superior unit costs appealing for shorter missions.
Turboprop engines create their thrust with a very high bypass ratio. The result is 30% better fuel economy than a jet. But it also means 30% lower speed. This limits turboprops to stage lengths to about half that of jets.
The market-dominating ATR and De Havilland Canada (DHC) turboprops use this base efficiency to compete against newer regional jets despite having designs which are 20 years older.
ATR-72-600 Source: Wikipedia.
Summary
- Turboprops have attractive economics, making them a larger part of the market post-COVID.
- ATR-72, DHC-8-400 turboprops are old designs.
- The only new turboprops come from Russia (Ilyushin I-114) and China (Xian MA700), limiting their market reach.
- Embraer is keen to enter the market with a new clean-sheet design.
- Continued dominance by ATR, DHC depends on whether Embraer goes ahead.
“Our long national nightmare is over.”–President Gerald R. Ford
By Scott Hamilton
Commentary
Jan. 10, 2021, © Leeham News: “Our long national nightmare is over.”
Gerald Ford is sworn in as president at the White House. Source: UPI.
These were the words of Gerald R. Ford, minutes after he was sworn in as the 38th President of the United States.
The events of Jan. 6 as Trump supporters invaded and occupied the Capitol proves our current, long national nightmare isn’t over yet. But it appears a crescendo was reached.
President-elect Joe Biden takes office Jan. 20. He’s got one huge mess bequeathed to him by Trump. Biden must end the COVID pandemic. He must repair the economy. He faces damaged US standing on the global stage. And he must repair the divisions within the US.
Bjorn’s Corner: The challenges of hydrogen. Part 19. Hydrogen airliner weight shift
By Bjorn Fehrm
January 8, 2021, ©. Leeham News: In our Corner before Christmas we discussed the hydrogen tank placement at the rear of the aircraft for Airbus’ ZEROe concept turbofan aircraft.
We now calculate how the weight transfer when emptying the tanks in the rear affects the ZEROe’s efficiency.
Figure 1. Airbus ZEROe hydrogen turbofan airliner. Source: Airbus.
Boeing to pay $2.5bn to settle criminal charges stemming from 737 MAX crisis
Jan. 7, 2021, © Leeham News: Boeing today agreed to pay $2.5bn to settle criminal charges with the US Department of Justice over the 737 MAX investigation.
The settlement comes in the form of a Deferred Prosecution Agreement (DPA).
In a filing with the Securities and Exchange Commission, Boeing synopsized the agreement:
The DPA contemplates that the Company will: (1) make payments totaling $2,513.6 million, which consist of (a) a $243.6 million criminal monetary penalty; (b) $500 million in additional compensation to the heirs and/or beneficiaries of those who died in the Lion Air Flight 610 and Ethiopian Airlines Flight 302 accidents; and (c) $1.77 billion to the Company’s airline customers for harm incurred as a result of the grounding of the 737 MAX, offset in part by payments already made and the remainder satisfied through payments to be made prior to the termination of the DPA; (2) review its compliance program for implementation of continuous improvement efforts; and (3) implement enhanced compliance reporting and internal controls mechanisms. Under the terms of the DPA, the criminal information will be dismissed after three years, provided that the Company fully complies with its obligations under the DPA. Of the payments described above, $1.77 billion has been included in amounts reserved in prior quarters for 737 MAX customer considerations. The Company expects to incur earnings charges equal to the remaining $743.6 million in the fourth quarter of 2020.
However, Dominic Gates of the Seattle Times points out that “Only $243.6 million, less than 10%, is a fine for the criminal conduct. And Boeing must pay an additional $500 million compensation to the MAX crash victim families. However, 70% of the $2.5 billion cited is compensation to airline customers that Boeing has already agreed to pay.”
Outlook 2021: Embraer faces recovery from failed JV, COVID
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By Bjorn Fehrm and Vincent Valery
Introduction
Jan. 7, 2021, © Leeham News: Embraer faces the twin challenges this year: recovering from the aborted Boeing joint venture and COVID.
Neither is going to be easy.
Embraer reintegrated the Commercial Aviation and 60% of its services unit back into the parent company.
Recovering from COVID depends on how soon and widespread vaccinations are accepted worldwide.
And, the E-Jet product line with its latest E2 variant has challenges.
Summary
- Overcoming the failed Boeing tie-up.
- Abating competition.
- Positive market outlook.
- E1 customers in one market…
- And E2 customers in the others.
Outlook 2021: Boeing needs boring, Airbus looks for recovery
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By Scott Hamilton and Vincent Valery
Introduction
Jan. 5, 2021, © Leeham News: What’s in store for Airbus and Boeing this year?
Boeing needs a boring year.
Airbus is clearly better positioned than Boeing.
Twenty-twenty one is a year of recovery for Boeing. It must dig out from a very deep hole.
Airbus reported that it hit cash break-even in the third quarter. But the company is not out of the woods yet.
Everything depends on something largely out of their control: how quickly the airline industry recovers from the COVID pandemic.
Summary
- Boeing hopes to deliver about half of the 450 stored MAXes this year.
- Low-rate production inches up for the 737.
- Widebody sales dried up for Airbus and Boeing.