Category Archives: Boeing

BBC: EASA will not accept the FAA’s decision on the Boeing 737 MAX

Boeing’s troubles with 737 MAX could continue, this time from Europe.

According to the BBC, the European Aviation Safety Agency (EASA) will conduct its own tests on the Boeing 737 MAX before it is permitted to fly in Europe. This represents a break from international protocol of aviation regulators accepting each other’s standards and findings.

Will the 737 MAX be allowed to fly in the United States (under the FAA’s clearance) and not in other places?

Read the full story.

Copyright Photo: Joe G. Walker.

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Recommended Reading: The Boeing 737 MAX Misconceptions: An Engineer’s View

By Dhierin Bechai – The Aerospace Forum.

This report and article is one of the best I have read on the Boeing 737 MAX from an engineering viewpoint. It is must reading for anyone who flies, wants to fly or flies on in the future. READ HERE

Above Copyright Photo: Joe G. Walker. Grounded Boeing 737 MAX aircraft are stacking up in a lot of locations.

Other related articles:

First on CNN: 737 MAX panel to call for changes in FAA certification process

Boeing hiring hundreds of temporary workers to maintain parked 737 Max planes

 

Boeing delays the first flight and delivery of the new 777X

New Boeing 777-9 (777X) with foldable wingtips

Boeing, according to a Reuters report, has delayed the delivery of the new long-range 777X due to engine issues with the new type.

The first flight of the 777-9 (777X) is now expected in 2020. The aircraft has been going through taxi tests at Paine Field in Everett, WA (top).

The 777X features new General Electric GE9X engines, new composite wings with folding wingtips, greater cabin width and seating capacity, and technologies from the Boeing 787 according to Wikipedia.

The 777X was launched in November 2013 with two variants: the 777-8 and the 777-9. The 777-8 provides seating for 365 passengers and has a range of 8,690 nautical miles (16,090 km) while the 777-9 has seating for 414 passengers and a range of over 7,525 nautical miles (13,936 km).

There are currently 45 orders for the 777-8 and 280 orders for the 777-9.

Read the full report from Reuters.

Top Copyright Photo: Boeing 777-9 (777X) N779XW (msn 64240) PAE (Nick Dean). Image: 947287.

OAG: Boeing 737 MAX: Revenue and ops impact

From OAG:

Boeing 737 MAX – Maximum Aviation Xpense

by John Grant


The grounding of the Boeing 737 MAX continues and the commercial damage for airline operators appears to be increasing as the loss of capacity is now at its highest during the peak summer season for many operators. But just how large is the damage and what is the current status?

Using our latest analytics tools, we tracked back to mid-February and compared the schedules filed then against the latest schedules filed for all B737Max operators and the numbers are staggering.

41 Million and counting….

In the table below we have outlined the original planned capacity for selected operators and compared that to the current planned B737 Max operation; in essence a “before and after” assessment of the grounding.

Table 1 – Selected Scheduled Airline B737 Max Grounding Impact

selected-scheduled-airline-b737-max-grounding-impact

Source: OAG Schedules Analyser

For every carrier there appears to be a significant reduction in capacity offered, much of which would have been assumed in the original planning of the carriers for this financial year. Last minute schedule adjustments are we know challenging for any carrier, but the scale of the B737 Max grounding has been very disruptive for many.

China Southern are the largest carrier impacted with a loss of some 3.8 million seats whilst American Airlines have lost close to 2 million seats. Indeed, across five major North American airlines some 11 million seats have been dropped from sales compared to the schedules filed in mid-February.

Many carriers have of course made operational adjustments, continued to operate aircraft with perhaps lower levels of capacity and incurred significant additional cost as part of that recovery programme. Accountants will of course be keeping a very close eye on every expense incurred as a result of the grounding as they prepare a series of claims for the inconvenience caused.

November Scheduling Dilemma

The introduction of the winter schedules for many airlines in the last week of October normally results in a slight seasonal reduction in capacity, at least until early in the new year. Just as importantly that date is a key planning milestone for many carriers and at the moment a number of airlines continue to show B737 Max services from the end of October as they are yet to finalise and adjust their schedules.

For many airlines contingency plans will already have been put in place and a realistic return to service of the aircraft by that date as speculation continues on when the aircraft will be able to re-enter commercial operations. Of course, for the airlines in any subsequent compensation claim publishing scheduled services from November onwards certainly doesn’t harm their case.

Chart 1- Planned B737 Max Capacity By Week Selected Scheduled Airlines

planned-b373-max-capacity-by-week-selected-scheduled-airlines

Source: OAG Schedules Analyser

Calculating the cost

The cost of the B737 Max grounding will of course vary from airline to airline. Some carriers may have had a higher dependency on Max flying, some may have had quicker and cheaper access to alternate aircraft, and some may perhaps have been able to mitigate some of their cost. Alongside the cost there will also be a loss of revenue for many airlines, some of whom may have sold more cheaper advanced purchase capacity based on B737 Max capacity and then found themselves unable to revenue manage their flights as originally intended.

Using a notional US$100 for the combined impact of additional costs; both direct and indirect and the loss of revenue then for the airlines affected the impact of the lost capacity could be running towards US$ 4 Billion and that assumes a November reintroduction which looks increasingly unlikely. When the expected profit for the airline industry in 2019 is some US$ 28 billion losing such a some will inevitably hit that expectation; especially when some of the world’s most profitable carriers are impacted.

John Grant

Written by John Grant

Reuters: Boeing to change 737 MAX flight-control software to address flaw

Reuters is reporting Boeing plans further changes to the MCAS software on the grounded Boeing 737 MAX to address a flight test flaw uncovered in June.

The change incorporates now taking input from both flight control computers.

Read the full report: CLICK HERE

Boeing reports a second quarter loss

The Boeing Company reported second quarter revenue of $15.8 billion, GAAP loss per share of ($5.21) and core loss per share (non-GAAP)* of ($5.82), reflecting the previously announced 737 MAX charge (which reduced revenue by $5.6 billion and earnings by $8.74 per share) as well as lower 737 deliveries partially offset by higher defense and services volume (Table 1). Boeing recorded operating cash flow of ($0.6) billion and paid $1.2 billion of dividends.

The previously issued 2019 financial guidance does not reflect 737 MAX impacts. Due to the uncertainty of the timing and conditions surrounding return to service of the 737 MAX fleet, new guidance will be issued at a future date. Boeing is working very closely with the FAA on the process they have laid out to certify the 737 MAX software update and safely return the MAX to service. Disciplined development and testing is underway and we will submit the final software package to the FAA once we have satisfied all of their certification requirements. Regulatory authorities will determine the process for certifying the MAX software and training updates as well as the timing for lifting the grounding order.

“This is a defining moment for Boeing and we remain focused on our enduring values of safety, quality, and integrity in all that we do, as we work to safely return the 737 MAX to service,” said Boeing Chairman, President and Chief Executive Officer Dennis Muilenburg. “During these challenging times, teams across our enterprise continue to perform at a high level while delivering on commitments and capturing new opportunities driven by strong, long-term fundamentals.”

Copyright Photo: Joe G. Walker. Boeing 737 MAX aircraft in storage.

Commercial Airplanes second-quarter revenue was $4.7 billion reflecting the previously announced 737 MAX charge and lower 737 deliveries partially offset by favorable mix (Table 4). Second-quarter operating margin was (104.7) percent reflecting the previously announced 737 MAX charge and lower 737 deliveries partially offset by a higher margin on the 787 program.

During the quarter, Commercial Airplanes delivered 90 airplanes, including 42 787s, and captured orders for two 777 freighters for DHL and six 767 freighters for FedEx.

Highlights from the Paris Air Show included a letter of intent from IAG for 200 737 MAX airplanes as well as several wide body commitments. The 777X program is progressing well through pre-flight testing. While the company is still targeting late 2020 for first delivery of the 777X, there is significant risk to this schedule given engine challenges, which are delaying first flight until early 2020.

Commercial Airplanes backlog remains healthy with more than 5,500 airplanes valued at $390 billion.

Boeing to recognize charge and increased costs in second quarter due to 737 MAX grounding

Boeing has made this announcement on the on-going grounding of the 737 MAX:

Boeing has announced it will recognize an impact to earnings when it releases second quarter 2019 results on July 24.

Boeing will record an after-tax charge of $4.9 billion1 ($8.74 per share) in connection with an estimate of potential concessions and other considerations to customers for disruptions related to the 737 MAX grounding and associated delivery delays. This charge will result in a $5.6 billion reduction of revenue and pre-tax earnings in the quarter.

While the entire estimated amount will be recognized as a charge in the second quarter, the company expects any potential concessions or other considerations to be provided over a number of years and take various forms of economic value.

Additionally, Boeing’s estimated costs to produce the aircraft in the 737 accounting quantity increased by $1.7 billion in the second quarter, primarily due to higher costs associated with a longer than expected reduction in the production rate. The increased 737 program costs will reduce the margin of the 737 program in the second quarter and in future quarters.

Boeing continues to work with civil aviation authorities to ensure the 737 MAX’s safe return to service, and these authorities will determine the timing of return to service. For purposes of the second-quarter financial results, the company has assumed that regulatory approval of 737 MAX return to service in the U.S. and other jurisdictions begins early in the fourth quarter 2019. This assumption reflects the company’s best estimate at this time, but actual timing of return to service could differ from this estimate. The second-quarter financial results will further assume a gradual increase in the 737 production rate from 42 per month to 57 per month in 2020, and that airplanes produced during the grounding and included within inventory will be delivered over several quarters following return to service. Any changes to these assumptions could result in additional financial impact.

“We remain focused on safely returning the 737 MAX to service,” said Boeing Chairman, President and CEO Dennis Muilenburg. “This is a defining moment for Boeing. Nothing is more important to us than the safety of the flight crews and passengers who fly on our airplanes. The MAX grounding presents significant headwinds and the financial impact recognized this quarter reflects the current challenges and helps to address future financial risks.”

Boeing Chief Financial Officer and Executive Vice President of Enterprise Performance and Strategy Greg Smith added, “We are taking appropriate steps to manage our liquidity and increase our balance sheet flexibility the best way possible as we are working through these challenges. Our multi-year efforts on disciplined cash management and maintaining a strong balance sheet, in addition to our strong and broad portfolio offerings, are helping us navigate the current environment.”

Boeing’s previously-issued 2019 financial guidance did not reflect impacts related to the 737 MAX. Due to the uncertainty of the timing and conditions concerning 737 MAX return to service, new guidance will be issued at a future date.

1 = Reflects the tax impact recorded in the second quarter of 2019. Based on current assumptions, additional tax impact would be recorded later in the year bringing the 2019 after-tax charge down to approximately $4.4 billion.

Photo: Joe G. Walker.