Leeham News and Analysis
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Leeham News and Analysis
- Airbus 1Q2024 results: Airbus CEO: “A350 in-service experience drives positive reputation and orders” April 25, 2024
- A350-1000 or 777-9? Part 3 April 25, 2024
- Boeing CEO promises company is turning around…again April 24, 2024
- Solid start for stand-alone GE Aerospace despite cuts to LEAP output April 23, 2024
- SPEEA, Boeing at impasse over safety program, union says April 23, 2024
Airbus 1Q2024 results: Airbus CEO: “A350 in-service experience drives positive reputation and orders”
By Bjorn Fehrm
April 25, 2023, © Leeham News: Airbus has presented its results for the first quarter of 2024. The strong order flow continues, with a pickup on the widebody side, especially for the A350.
Airbus has, therefore, canned the rate 10 target for 2026 and aims for rate 12 in 2028, with a stronger mix of A350-1000s.
The company has a net cash position of €8.7bn and €30bn liquidity. Guidance for 2024 is unchanged, with 800 commercial aircraft delivered, an EBIT adjusted of €6.5bn to 7 bn, and a Free cash flow of €4bn.
A350-1000 or 777-9? Part 3
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By Bjorn Fehrm
April 25, 2024, © Leeham News: We are doing an article series comparing the capabilities of the Airbus A350-1000 and the Boeing 777-9. We looked at the development history of the aircraft and compared their size and payload capacity.
Now, we use our Aircraft Performance and Cost Model (APCM) to fly the aircraft on a typical route and compare their performance. We also look at their stage of development and the potential for future upgrades inherent in the design.
Summary:
- The A350-1000 has got its Maximum TakeOff Weight (MTOW) increased four times since entry into service.
- The latest MTOW hike to 322t gives the A350 a clear payload-range advantage over the 777-9. Any increase in the 777-9’s MTOW will have to come after type certification.
Boeing CEO promises company is turning around…again
By the Leeham News Team
April 24, 2024, © Leeham News: Boeing burned about $3.9B in free cash and posted a loss of $1.13 per share during the first quarter, the company reported on Wednesday. It also reported its first quarter-over-quarter revenue decline since 2022.
Even so, the bleeding was substantially less than expected by Wall Street, which had a consensus forecast of -$1.63/share (and a range of -33 cents/share to -$3.16/share). Boeing Commercial Airplanes’ financial performance suffered from the downturn in 737 MAX production since the Jan. 5 accident involving Alaska Airlines Flight 1282, when an emergency exit door plug blew out as the plane climbed out of Portland.
The company’s quarterly finances were bolstered by Boeing Global Services and Boeing Defense.
Boeing CEO David Calhoun continued to assert that company executives are proactively cleaning up an inconsistent safety culture and addressing production woes from their corporate offices on the Potomac. The company’s planned acquisition of Spirit AeroSystems is taking longer than expected, and it could be wrapped up by mid-year, he told investment analysts during a conference call on Wednesday.
Fuselages for the 737 MAX program from Wichita have fewer and fewer defects, and the program’s production rate will increase in the second half of the year, Calhoun and Boeing CFO Brian West said during the call.
Solid start for stand-alone GE Aerospace despite cuts to LEAP output
By Tom Batchelor
Apr. 23, 2024, © Leeham News: GE Aerospace enjoyed a “solid start” to 2024 with double-digit growth across orders, revenue and operating profit, the engine maker said as it published its Q1 results – the first since becoming a standalone aerospace company.
The Ohio-headquartered supplier reported “significant profit and cash growth” and raised its full-year forecast following the recent spin off of its aviation and energy businesses.
Aerospace orders grew by 34%, to $11bn, with revenue up 15%, to $8.1bn, helped by pricing, spare parts volume, and increasing deliveries in widebody and defense.
That pushed operating profit to $1.5 billion, an increase of 24%. Operating profit margins reached 19.1%, up by 140 basis points.
In its updated forecast for the full-year 2024, GE Aerospace said operating profits were expected to climb to $6.2-6.6 billion, up from the $6-6.5 billion that was listed in earlier guidance. Read more
SPEEA, Boeing at impasse over safety program, union says
By Scott Hamilton
April 23, 2024, © Leeham News: Boeing and its engineers/technicians union, the Society for Professional Engineering Employees in Aerospace (SPEEA) are at an impasse over the proposed creation of a safety program widely used by airlines and other companies, the union says.
The Aviation Safety Action Program (ASAP) is already in use by Boeing for flight testing. And the touch-labor union, the International Association of Machinists and Aerospace Workers (IAM) District 751 and Boeing recently adopted an ASAP that is in its early stages of implementation.
ASAP is a program, used across the airline and aerospace industries, by which employees may pass safety concerns to the regulators, in this case, the Federal Aviation Administration (FAA), without fear of retaliation or retribution.
“The ASAP program was designed for FAA-certified airmen—pilots, mechanics, dispatchers,” said a former Boeing employee whose duties at one time included safety. “In the airline world, nothing gets pre-screened. For a reason! The ASAP program is set up for Boeing flight tests. Production pilots at Boeing operate this way.”
- SPEEA internal memo with its safety concerns: Safety culture memo 041024
“We have offered SPEEA the same agreement we signed with the IAM and the FAA to strengthen safety, quality, and compliance,” a Boeing spokesperson said in an email to LNA. “We believe it will make a difference in ensuring product safety. This tri-party agreement is modeled after the longstanding and proven Aviation Safety Action Program (ASAP) which is used in the airlines and elsewhere in Boeing.”
Better transparency needed on Boeing’s 1Q earnings call
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By Scott Hamilton
Analysis
April 22, 2024, © Leeham News: Boeing reports its first quarter financing results on Wednesday. It’s not going to be pretty.
But how “transparent” will CEO David Calhoun and CFO Brian West be?
These days, “transparency” seems to be Boeing’s buzzword. It used to be “safety is our number one priority.” As we’ve seen about safety since the 2018-2019 737 MAX crisis, “safety” seemed more rhetorical than the Number One priority. “Safety” came under question again following the Jan. 5 accident involving Alaska Airlines Flight 1282. That’s the flight in which an emergency exit door plug blew off the airplane at 16,000 ft. Luckily, nobody was sucked out of the airplane. There were minor injuries and damage throughout the cabin. The plane was a 10-week-old 737 MAX 9. A new crisis was underway.
The National Transportation Safety Board (NTSB) quickly determined that four bolts that hold the door plug on 12 brackets were missing after what Calhoun euphemistically called a “quality escape” weren’t reinstalled during the final assembly of the accident airplane.
Subsequent information, including a special six-week audit by the Federal Aviation Administration (FAA) and a year-long study that was released within a month of the Alaska accident concluded Boeing failed to meet dozens of safety standards. Even safety procedures announced by Boeing after the first MAX crisis were not being met.
Calhoun and others within Boeing vowed transparency. However, the expert panel that conducted the year-long study noted their work was inhibited by non-disclosure agreements limiting access to documents. They also noted that some Boeing employees met with company lawyers before being interviewed.
Transparency over latest charges
Boeing last week made two engineers available in a special media conference to refute charges by a whistleblower that safety failures continue to occur in the final assembly of the 777 and 787. The technical presentation was detailed and thorough. Assuming the information was not cherry-picked, Boeing painted a picture that the complaints were either unfounded or that Boeing had corrected many of the issues already. The in-service 777 and 787 fleets are safe, they said.
LNA’s Bjorn Fehrm, an aerospace engineer who remains active in this capacity in our consulting business, reviewed the Boeing presentation and our raw transcripts. He backs the safety of the airplanes.
There has been a “growing trend of quality erosion,” wrote aerospace analyst Ron Epstein in an April 11 note, citing the 787 industrial debacle and its three-month grounding by the FAA in 2013. “A lack of oversight has plagued the MAX program since inception.”
But transparency issues don’t stop there. And here’s something for Calhoun and West to address on Wednesday (not that they will take our urging to heart).
Advertised production rates on the 737 and 787 lines are far higher than the data suggests. But Boeing has failed to be forthcoming about the true rates—and it hasn’t for months. Cash flow data may be affected by a recurring practice that some call an accounting trick to distort this picture.
Bjorn’s Corner: New engine development. Part 4. Propulsive efficiency
By Bjorn Fehrm
April 19, 2024, ©. Leeham News: We have started an article series about engine development. The aim is to understand why engine development now dominates new airliner development when it comes to the needed calendar time for development and the risks involved.
To understand why engine development has become challenging, we need to understand engine fundamentals and the technologies used to achieve them. Last week, we discussed propulsive efficiency and learned that it depends on the Overspeed the engine gives its exhaust air-gas mix.
We then used two direct-drive engines from CFM (CFM56 for the 737 ng and LEAP for the 737 MAX) to give us examples of Overspeeds and their corresponding Propulsive efficiency. Now, we look at geared turbofans.
Figure 1. One of the first geared turbofans (if not the first), the Turbomeca Aubisque used on the SAAB 105 jet trainer. Source: Swedish Military Airplane History.
Boeing unlikely to meet FAA’s 90-day deadline for new safety program
By Scott Hamilton
April 18, 2024, © Leeham News: Boeing appears unlikely to meet a 90-day deadline to submit a comprehensive plan to address safety concerns, insiders tell LNA.
The Federal Aviation Administration (FAA) on Feb. 28 gave Boeing three months to address “systemic quality-control issues,” a move sparked by new safety concerns following the Jan. 5 accident of Alaska Airlines flight 1282. A 10-week-old 737-9 MAX was minutes into climb-out from the Portland (OR) airport when a door plug blew out, prompting explosive decompression of the cabin. Nobody died but there were injuries and damage throughout the cabin.
“FAA Administrator Michael Whitaker told Boeing that he expects the company to provide the FAA a comprehensive action plan within 90 days that will incorporate the forthcoming results of the FAA production-line audit and the latest findings from the expert review panel report, which was required by the Aircraft Certification, Safety, and Accountability Act of 2020,” the FAA said in the Feb. 28 press release.
- Boeing firefighters union rejects contract again; free to strike May 3. See below.
- SPEEA, Boeing’s engineer and technician union, tells members to start saving for a strike. See below.
“The plan must also include steps Boeing will take to mature its Safety Management System (SMS) program, which it committed to in 2019. Boeing also must integrate its SMS program with a Quality Management System, which will ensure the same level of rigor and oversight is applied to the company’s suppliers and create a measurable, systemic shift in manufacturing quality control.”
Now 45 days later, LNA is told Boeing is unlikely to meet the deadline. Furthermore, Boeing’s engineering and technicians union has had no outreach from Boeing seeking its input into the plan.
Focus on quality not slowing innovation, says GKN
By Tom Batchelor
April 18, 2024, © Leeham News: The crisis at Boeing forced the entire supply chain to re-evaluate manufacturing processes and double down on quality control – but that is not yet stifling innovation, according to Peter Dilnot, CEO of Melrose PLC, the parent company of aerostructures and engine components supplier GKN Aerospace.
GKN Aerospace has undergone a restructuring that is now largely complete. Source: GKN
Melrose is most of the way through a comprehensive restructuring, and the company has emerged as a pure-play aerospace business that has consolidated production sites and exited “non-favorable” contracts.
“We don’t want to be everywhere,” explained Dilnot during a briefing in London attended by LNA this week, which was intended to set the scene ahead of July’s Farnborough Airshow.
“One of the reasons I think aerospace is so much in vogue at the moment is that it is one of the very few markets where you’ve got structural growth. Aerospace is unique in that we’ve got these long order backlogs, structural growth and as a result a growing top line for industry participants.”
From 50 production facilities pre-COVID, GKN is now down to 33, and it will soon be at 31 sites. Its four global technology centers remain in the UK, where it is headquartered, the US, the Netherlands, and Sweden.
The positioning of Melrose as a leaner business after the spin-off of its automotive unit is producing positive results. The company posted revenue of £3.35bn ($4.29bn) for 2023, 17% growth over the previous year, and adjusted operating profit of £420m (up from £186m in 2022), in its full-year results last month. Operating margin reached 12.5%, up from 6.3%, and profits of £700m are being targeted by 2025.
Read more
Boeing defends 787, 777 against whistleblower charges
By Scott Hamilton
April 17, 2024, © Leeham News: A whistleblower appeared before the US Senate today recommending that the entire fleet of Boeing 787s be grounded until inspections can be performed to assure safety.
The whistleblower, Sam Salehpour, is a Boeing engineer who worked on the 787. He claims he was moved off the program by Boeing in retaliation for raising safety concerns about the 787 and the 777. Boeing denies this charge.
Salehpour went public with his safety charges a week ago. He focused on the small gaps between fuselage sections and other areas on the airplane that failed to meet Boeing’s own specifications. Production gaps, where parts of the airplane are mated, are common. Boeing and other manufacturers use shims to fill these gaps.
This illustration, which is not to scale, shows how gaps develop, how joins are pulled together and how shims fill gaps that remain. The gaps are 0.005 to 0.008 inches wide–about the thickness of a piece of paper. Source: Boeing.
In 2020, Boeing revealed that in some cases, the gaps were greater than the 0.005 inches of its own specifications. Gaps of 0.008 inches were found. The gaps are the thickness of a piece of paper. Boeing initially grounded eight 787s for inspection.
In October 2020, Boeing suspended delivery of the 787 for what would eventually be 20 months. Deliveries already had been deferred by customers because of the COVID-19 pandemic. Ultimately, Boeing has 110 787s parked that were completed. After a lengthy process with the Federal Aviation Administration, the FAA approved Boeing’s fix. The fuselages of the 110 airplanes have to be inspected and measured. If repairs are necessary, it takes longer (5-6 months and in some extreme cases, 7-8 months) to complete than it does to assemble the airplanes in the first place. There are about 40 787s still awaiting rework.