NewsWhats happening


Boeing'a attraction to Embraer

Boeing Co.’s attraction to Embraer SA fits one of the goals Chief Executive Dennis Muilenburg has set for the aerospace giant: creating a level playing field in the commercial jetliner business.

Boeing this week confirmed a Wall Street Journal report that it was in talks with Embraer.  But factors such as potential VETO from the Brazilian government could thwart a tie up. Analysts said that the chances of a full takeover were slim and that an expansion of the companies’ existing joint venture was a more likely outcome.


Airbus and Indigo

Airbus SE said this week it had completed a record-setting order for 430 jets from four airlines.  These four airlines are linked to a U.S. private-equity firm.  This one announcement narrows the gap opened up by rival Boeing Co. on new plane deals in 2017.

The European plane maker booked the order first outlined at last month’s Dubai Airshow for A320neo family jets.  These 430 jets are destined for carriers linked to Indigo Partners LLC: Frontier Airlines in the U.S., Hungary’sWizz Air Holdings WIZZ PLC, Mexico’s Volaris and JetSmart, a new Chile-based carrier.

The sale is the biggest-ever bulk buy of planes in terms of aircraft number, with the jets carrying a list price of $49.5 billion before discounts that analysts estimate could run as high as 60%. Airbus and Indigo didn’t disclose the actual terms.

Boeing 797

Boeing says its time for a new aircraft.  The next new Boeing, known as the “new midsize airplane,” and unofficially, the 797, would likely be a double-aisle jet.  The long process of design, building, testing, etc would mean the aircraft is not  intended for delivery until around 2025.

The goal is to meet airlines’ needs for a plane bigger than the single-aisle 737, and smaller and with less range than the 787 Dreamliner. The new plane would overlap with the discontinued but still widely used 757 and 767, ferrying 200 to 280 passengers up to around 5,000 nautical miles.

The market for such a plane is questionable, which is one reason Boeing has not started developing it yet. The last 757 came off the line in 2004, and while airlines might like a replacement, it hasn’t been a major priority.

And Airbus has an aircraft in that space already.  It can elongate the popular single-aisle A321.  This would be at a lower cost and lower execution risk, since it wouldn’t be a completely new plane.

That doesn’t mean pursuing the 797 is a bad decision, just one that needs to be done with caution.

Boeing Reported Profit Down 9 Percent

Boeing Reported First-Quarter Profit Down 9 Percent due to a $156 million charge for the KC-46 program, and a $70 million pretax charge for its 747 program. The U.S. Air Force aerial refueling tanker program is over-budget and behind schedule, while the weak air cargo market has slowed sales of the jumbo jet freighter. Earnings fell to $1.22 billion, from $1.34 billion a year earlier, but first-quarter revenue increased 2 percent to $22.6 billion.

Boeing still forecasts that its full-year profit and revenue will match 2015 and it is confident that other parts of its business would make up for the added expenses. The defense business was better than last year’s first quarter. Chief Executive Officer Dennis Muilenburg said, “Higher year-over-year deliveries of military aircraft and continued solid operating performance on core production programs drove revenue growth and strong cash flow for Boeing in the first quarter.”

Boeing did not report a 787 charge and said the program’s deferred costs rose by only $141 million to $28.65 billion, less than prior quarterly increases, but still the hole deepens. Commercial Airplanes first-quarter revenue decreased to $14.399 billion on 4 percent lower delivery volume of 176 aircraft. First-quarter operating margin was 7.2 percent. In the previous year, revenue was $15.381 billion, and the operating margin was $10.5 percent. 

Earnings from commercial operations fell 36 percent to $1.033 billion from last year’s $1.617 billion. Commercial Airplanes booked 121 net orders during the quarter. Backlog remains strong with over 5,700 airplanes valued at $424 billion. In the first quarter of 2015, Boeing sold 116 aircraft, so sales this year are still strong, but some of those new sales were order changes to different types, which allowed at least one customer to delay delivery. In January, Mr. Muilenburg said Boeing will build between 740 and 745 commercial jets this year, down 20 from the 762 delivered in 2015, and the high-value 747 and 777 wide-bodies will be most affected. Expected revenue and cash flow for the year will drop accordingly. Boeing will build several flight test 737 MAXs this year, as well as the first production versions that cannot be delivered to customers until certification in 2017.

Client Log In

Past Issues

Breaking News - Avmark Newsletter

  • Demand for Airliners Soars: ‘We Cannot Make Planes Fast Enough’

    Read More ...

  • Video: Boeing, Airbus and the Battle for the Perfect Plane

    Read More ...

  • Pete Buttigieg Warns of Flight Delays as 5G Deadline Looms

    Read More ...

Cron Job Starts