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Plane maker has suspended buying the metal from Russia but must still deal with ties with company linked to sanctioned oligarch and Putin ally
Boeing Co has suspended parts of its business in Russia, but it still has to deal with its relationship to a key titanium supplier led by a sanctioned oligarch who once worked in the KGB with President Vladimir Putin.
The plane maker years ago made a big bet on the country’s titanium, crucial for manufacturing its commercial jets and military aircraft, and Boeing has warned that geopolitical changes could create supply problems in the future.
Boeing said it has halted purchasing Russian titanium since the country’s invasion of Ukraine. It also has closed its engineering offices in Moscow and Kyiv and stopped sending spare plane parts to Russian airlines. But as other Western companies retreat from Russia, Boeing declined to say what it will do about its joint venture with the titanium supplier led by Mr. Putin’s former intelligence colleague, Sergey Chemezov.
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Sanctions will devastate Russian aviation by denying it access to Boeing and Airbus parts. They will also give fresh impetus to efforts with China to develop alternatives to Western technology.
Boeing and Airbus dominate global aviation, but China’s Comac wants to challenge the duopoly with new planes. WSJ’s Jon Sindreu explains how supply chains, technology and geopolitics could help the Western aircraft makers to protect key markets.
Russia’s increasing isolation from the West will leave it looking towards China for alternative economic partnerships. Aviation is a prime example: Badly hit by sanctions, the Russian industry has little choice but to double down on collaboration with its big peer to the East.
Commercial aviation faces ruin in Russia because the U.S. and its allies have blocked the sale of aircraft, parts and technical support to the country. Since the 1990s, Soviet Union-era aircraft have been replaced by Boeing and Airbus models, with domestically built planes currently making up only 17% of the fleet, Cirium data shows. Without new parts, airlines like Aeroflot and S7 Airlines will eventually need to ground their jets.
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In a heavy snow, crews can spray up to 1,000 gallons of deicing fluid on an aircraft
Deicing an aircraft is a coordinated effort, involving multiple steps and a race against the clock. A United Airlines deicing expert explains the process and why it’s critical to keeping planes moving.
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World’s biggest plane maker tempers guidance on plans to dramatically increase production of A320s
Airbus SE tempered expectations for sharply boosting production of its bestselling jet, blaming supply-line challenges that threaten its ambition to rapidly widen a market-share advantage it opened with Boeing Co. BA -2.44% during the pandemic.
The plane maker reported record profit Thursday and said it would reinstate its dividend, benefiting from still-robust demand for its commercial airliners. But it dialed back the likelihood of dramatically boosting future production rates for its A320, the single-aisle rival to Boeing’s 737 MAX.
The 737 MAX suffered a long grounding after two deadly crashes, forcing a short-term halt to production. Then, amid the pandemic, Airbus pressed airline customers to honor contracts, further boosting its share of the single-aisle market.
The European plane maker has been bullish on the aviation sector’s eventual recovery, after pandemic travel restrictions hobbled many airlines. It told suppliers last year to be ready for a quick production ramp-up, promising to push out 65 A320s a month by the summer of 2023. It also said it had asked suppliers to explore whether it could raise that to 75 a month by 2025.
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If the world finally moves on from Covid-19 this year, the plane maker’s cautious financial guidance could prove easy to beat
A move by Airbus to fly under the radar could be a wise one.
Shares in the European plane maker initially rose Thursday, after it released encouraging financial results for the final quarter. Operating earnings were 11% above the median analyst estimate. Free cash flow, which is even more important for aerospace firms, was almost twice as high as expected for the quarter, and amounted to €3.5 billion, equivalent to $4 billion, for 2021 overall. That echoes a better-than-expected cash performance at Boeing, its American rival.
Yet Airbus stock edged down as European trading got under way. The broader travel sector came under pressure amid fresh jitters about a potential war in Ukraine, but it may also have to do with the company’s somewhat underwhelming guidance. Targets for 2022 include flat free cash flow and the delivery of 720 commercial aircraft.
While these aren’t bad numbers, some investors were expecting more. Airbus managed to surpass its 2021 goal of 600 planes by 11 units, and was delivering 860 planes before the pandemic. Executives sounded cautious when addressing analysts Thursday.
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Longstanding disagreements between federal agencies over potential risks to aircraft remained unresolved in the days leading to the 5G debut
The Biden and Trump administrations had years of warnings. But the government failed this week to avoid a collision between U.S. telecom companies and airlines over the rollout of new 5G cellular networks.
That failure, rooted in longstanding disagreements over potential risk and a lack of cooperation by U.S. regulators, led to a last-minute scramble that threatened the cancellation of thousands of flights and raised tensions between two powerful industries.
Since 2015, the Federal Aviation Administration has questioned whether decades-old aviation equipment would be disrupted by new cellular signals. The risk to aircraft from new 5G services has been dismissed by the telecom industry and its regulator.
Yet the FAA, still sifting through a flood of wireless-company data, was altering flight-safety instructions in the days leading up to the 5G rollout. Boeing Co. , meanwhile, began talking last weekend with users of its 777 jets about possibly halting flights into major U.S. airports ahead of the 5G debut. Along with questions about shifting FAA restrictions, that set off days of panicked calls among airline chiefs and White House officials, people familiar with the matter said.
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Wisk joint venture with Google co-founder Larry Page is developing pilotless electric aircraft
Boeing Co. said it is investing a further $450 million in its air-taxi joint venture with Google co-founder Larry Page, developing small, pilotless aircraft for short passenger hops in and around cities.
The company’s Silicon Valley-based Wisk venture joins an expanding crowd of electric air vehicles that have attracted billions of dollars in new funding over the past year. Some aim to start service by the middle of the decade, though those efforts hinge on an evolving regulatory framework to ensure passenger safety.
Rival plane makers Airbus SE and Embraer SA are developing their own electric air taxis, alongside other startups that have attracted interest and investment from airlines, private jet operators and aircraft leasing companies. The U.S. Air Force is also involved with developing flying taxis for military use.
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The U.S. plane maker reported wider losses due to problems with its 787 Dreamliner, but also turned cash-flow positive for the first time since 2019
Deliveries of Boeing’s popular 787 Dreamliner slowed to a trickle last year due to a raft of factory defects.
Boeing’s glass still looks half empty, but there are signs of change.
On Wednesday, the plane maker said it lost $4 billion in the fourth quarter—half the size of the hit for the same period of 2020 but much larger than Wall Street analysts were forecasting. Even as Boeing overcame its problems with the 737 MAX, deliveries of the popular 787 Dreamliner slowed to a trickle last year due to a raft of factory defects. This forced the company to record a $3.5 billion charge for compensating customers, plus $285 million in abnormal production costs that are forecast to eventually add up to $2 billion. This is twice what was initially expected.
Yet the company also surprised analysts with a long-awaited milestone: For the first time since 2019, it had positive free cash flow. Boeing’s value in the futures market whipsawed as investors weren’t sure whether to interpret the results as good or bad overall, but they settled clearly on “bad” when the stock market opened.
For valuing aerospace stocks, free cash flow is often preferred to earnings themselves, because calculating the profitability of businesses that depend on hugely costly product launches can be more art than science. In Boeing’s case, extra 787 expenses are having an immediate impact on quarterly earnings, even though the company isn’t spending all the money right away. Cash probably gives a more accurate picture of the underlying business.
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