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Talk about lucky timing.

Old 02-05-2020, 04:12 AM
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Default Talk about lucky timing.

Our delivery schedule is spiking at a time when the 737MAX production and delivery schedule is severely crippled. Normal production rates on the 737MAX not expected until 2023 at the earliest.

Does Bill Franke own a white cat?



Aviation Week article: Boeing 737 MAX Production Increases Could Be A Whisper, Not A Roar

Michael Bruno February 05, 2020

=12ptBoeing’s Jan. 29 teleconference will be remembered as one of the most humbling earnings reports in the 103-year-old company’s history, but for 737 MAX suppliers it will also set the tone for the next two or three years.“Slowly” was the buzzword repeated often by Boeing leadership, especially when it came to the narrowbody’s monthly production rate ramp-up—assuming the MAX is set to become “ungrounded” and production resumes after halting this month. Boeing CEO David Calhoun and Chief Financial Officer Greg Smith said during the call that production flow will return “one step at a time,” even “one airplane at a time.”

Boeing still has not forecast production plans beyond stating it can restart manufacturing months before the MAX is returned to service. But already major suppliers, analysts and consultants are piecing together a road map that foresees MAX monthly unit production rates hitting the mid-20s this year, the 30s most of next year and possibly back to 52—where it stood before the MAX crisis—by the end of 2022.

“Probably the most distressing aspect of the line shutdown was the relative lack of guidance provided to suppliers,” Teal Group analyst Richard Aboulafia said Jan. 23. “Rate 52—if we get that in late 2022, I’d be super happy.”

Considering that Boeing has indicated a new public marker of a midyear MAX return to service that seemingly is backed by the FAA, the supply chain is expecting Boeing’s own production to restart in March or April. “We’ve assumed roughly a 90-day production delay, which is consistent with direction that we’ve received from Boeing,” says United Technologies Corp. (UTC) Chairman and CEO Greg Hayes.

More anecdotal evidence came Jan. 30 from aerostructures leader Spirit AeroSystems, when managers there announced a new agreement with Boeing over MAX production. “Under the agreement, Spirit will restart production slowly, ramping up deliveries throughout the year to reach a total of 216 MAX shipsets delivered to Boeing in 2020,” the Wichita supplier said. “Spirit does not expect to achieve a production rate of 52 shipsets per month until late 2022.”

In turn, that would imply an average production rate of 24 per month in 2020, according to financial analysts Sheila Kahyaoglu and Greg Konrad at Jefferies, who note that Spirit already counts about 95 737 units parked in or near its factory.

Other suppliers are making similar noises. Hayes of UTC, home to Collins Aerospace and Pratt & Whitney, says managers assume an average production rate of 21 per month in the second half of the year for Collins. General Electric executives say their Leap engine production has not stopped, but the rate this year will fall to roughly half what it was in 2019, also indicating a rate of 21.

This is all a world apart from the five-a-month jumps Boeing and suppliers originally envisioned shortly after MAX production was cut to 42 a month last April. Based on what they heard at Aviation Week’s MRO Americas 2019 conference, Leeham News and Analysis reported at the time that MAX-makers had eyed a rate increase to 47 in June, 52 by August and finally 57 by last September. Of course, rate 57 is where Boeing and suppliers were poised to go to before the MAX crisis erupted.

Now it is a “creep, crawl, walk, jog, and then run approach,” as industry consultant Jim McAleese puts it. Among the consequences, the first year of “normal” MAX production will be 2023, also when Boeing might get up to rate 57.

In turn, Boeing and its suppliers have to adjust their earnings expectations to account for both the lack of previously planned deliveries as well as new costs, since they were positioned for rate 57 by last summer. For its part, Boeing added $9.2 billion to its summary of MAX-related financial charges as part of its latest earnings report, bringing the total to $18.6 billion so far.

Cost estimates from the supply chain are trickling in, and they range from mild to eye-popping. Hayes says the production pause is projected to cost UTC just $100 million per month in sales. “We do not anticipate any layoffs,” he adds. “I think that would be the easiest thing to do, but quite frankly, given the scarcity of talented aerospace workers out there, we’re not going to be laying anybody off for a 90-day delay here. I think we’re going to work on the backlog.”

But Spirit has already announced layoffs of at least 2,800 workers in Wichita. Increasingly, smaller suppliers are warning Wall Street of bad news, too. British aerostructures provider Senior said Jan. 31 its aerospace revenue this year could drop 20% compared with last year, due to the MAX production halt. Senior’s operating margins will slip as well, and according to media reports the company is saying the recently announced sale of its aerostructures business might have to be shelved until more MAX certainty emerges.


Michael BrunoBased in Washington, Michael Bruno is Aviation Week Network’s Senior Business Editor and Community and Conference Content Manager. He covers aviation, aerospace and defense businesses, their supply chains and related issues.
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Old 02-05-2020, 06:07 AM
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Imagine if Frontier had decided to order the MAX instead of the NEO. If our fleet was supposed to be just over 50% MAX instead of NEO right now..... we would probably go out of business.
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Old 02-05-2020, 06:43 AM
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Originally Posted by Aero1900 View Post
Imagine if Frontier had decided to order the MAX instead of the NEO. If our fleet was supposed to be just over 50% MAX instead of NEO right now..... we would probably go out of business.
I think there are a couple European carriers that are in that exact predicament.
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