Does Boeing Stand a Chance Anymore??

what does boing's latest crisis tell us about their Market position compared to Airbus and how far behind are they will it even be possible to recover this lost ground for them for a company that was once considered the gold standard of commercial Aviation Boeing's reputation has clearly been compromised its share price fell by 20% in a month well things aren't looking that good right now that's for sure but there may be a thin Ray of Hope for boing after all stay [Music] I've already made several videos on the blowout of the max 9 mid cabin door plug which happened on the 5th of January 2024 and I will probably have to make more as the official report start getting released but today I want to talk to you about what this story means for boing's business as a whole and what it might mean for their future I'm sure most of you know that there is a long list of problems that Boeing has been dealing with over the past few years and it's fair to say that the 737 Max one and the one and a half year grounding back in 2019 definitely got the most attention but in case you missed it Boeing actually also stopped delivering 787s for a period even longer than that starting from around September in 2020 that stop was caused by various quality and supplier problems which hit the 787 production causing a stop in deliveries for nearly 2 years what this means is that Boeing now has a 787 backlog where the involved aircrafter in need of various checks and rework before they can be delivered to their customers as for their Flagship the huge boing 7x this aircraft should have taken 7even years to develop and certify but now instead looks certain to take at least 12 years and that's without even being an all new design if we go beyond their airliners Boeing also has a number of military and space programs which frankly aren't looking much better these include things like the KC 46 tanker the Starliner space vehicle and the next Air Force One all of these projects are currently recording losses mostly because of agreed fixed price contracts where Boeing themselves have to cover any unforeseen costs but the thing is before the max 9 blowout in January it seemed like Boeing were finally beginning to put their Ducks back in a row even if they still had a lot of work to do for example they seem to be getting really close to certifying the 737 max7 the smallest member of the max family whose main operator will eventually be Southwest Airlines on top of that it also looked like Boeing was about to start delivering new 727 Maxes to Airlines in China for the first time since early 2019 and they actually also made that happen a few weeks later in January of 2024 now that was a big deal for boing because you see Airlines and aircraft less ERS only pay a very little bit of money in advance when they buy their new Jets meaning that manufacturers gets almost all of their money upon delivery and Boeing had a backlog of around 85 737 Maxes that were supposed to be delivered to Chinese carriers meaning that they had a lot of money tied up there Bo's total 737 Max inventory is today close to 200 yet so should all get delivered within 2024 well except for 35 of them who are 7 7 max 7s and Max 10s and I'll get back to those very soon the final good news were that the FAA certification flights for the Triple 7x also got on the way last year which meant that Boeing restarted their production in late 2023 at a slow rate of course since final certification and deliveries likely won't come until 2025 so with all of that said and done how did Boeing actually do in 2023 well they definitely did better than than they did in 2022 but when you compare them with Airbus it still doesn't paint a very Rosy picture during the year before in 2022 Boeing delivered a total of 480 aircraft and in 2023 that number went up to 528 and by the way 396 of those Jets were 737s including military p8 padons that's by the way why we say that single aisle aircraft are the bread and butter product of both Airbus and Boeing since that's really what most of their profits are made as for Airbus in 2022 they delivered 661 Jets which rose to 735 in 2023 according to Dominic gates in Seattle Times this means that Airbus delivered nearly 40% more aircraft than Boeing did last year and to make matters even worse remember that Boeing had a lot of 737 and 787s in delivery backlog from the previous groundings well it turns out that that some of boing's 2023 deliveries actually involved quite a few Jets from this backlog so not planes coming directly from their assembly lines anyway that was deliveries so what about new orders then well 2023 was actually a pretty great year for both Boeing and airboss thanks to really big orders from a few airlines in India an aviation deal for the record books in history boing got net orders for 1,314 aircraft in total up from 77 four in the year before an Airbus broke the alltime record for new aircraft orders as they scored 294 net orders that's orders minus any cancellations and conversions that's an astounding number but if we focus only on orders for the 737 Max and the A320 Neo family well then Airbus got nearly twice as many orders as Boeing did both manufacturers obviously got more orders than deliveries which means that their order backlogs continue to grow so Boeing now has total orders of 5,626 aircraft while Airbus has again much more than that sitting at 8,598 what this all means is that Airbus has beaten Boeing for the fifth year in a row now and very little seems to be changing in that Trend but if we just ignore Airbus for a second well then we can see that Boeing's numbers are at least heading in the right direction and this fact has led to a lot of analysts to suggest that at least in the short term boing should just continue doing what they're doing right now they basically just need to keep their head down deliver aircraft continue work to certify new ones and look after their supply chain and also make sure that things just continue to run as smoothly as humanly possible whereas Dan catchpool in lehem news put it in an article that was published on the 4th of January one day before the max 9 blowout Bo just needs a boring year in 2024 so what will the max 9 door plug blowout do to all of these numbers and the plans that Boeing has and what other factors are still out there potentially affecting their future well I'll tell you all about that after this now before we continue let me share something with you that I find really disturbing did you know that there is an entire legal industry out there with companies known as data brokers who collect information about you and your family and then sells it off to the highest bidder I actually find that offensive and not only that the people that they sell it to can often be spam centers or even online criminals luckily today's sponsor incog reached out to me a few months back and asked if he could work together and with their help I have managed to be removed from 55 different data Brokers already with some more still to come you see you can actually ask to be removed from these companies but you have have to do so manually and to each one of them separately now incognet has devised a way to do this for you and also to continuously Monitor and enforce the removal request as long as you stay with them in my case it has already reduced a lot of my email spam if you want to start removing your personal data from these people as well well then click on the link here below which is incognito.com Mentor now if you do so the link will provide you with an exclusive 60% discount on incog annual plan thank you incog now let's continue as I said earlier one Milestone that Boeing really wanted to reach early in 2024 was the certification of the boing 77 Max D7 and while this looked like a really real possibility before the max 9 blowout it now instead seems to be very far away so why is that then well this has to do with a potential issue concerning the Niti system inside the engine n cells on all boing 7 to7 Maxes which Boeing discovered last year it turns out that theoretically under certain conditions when the aircraft is flying in dry air and at higher outside temperatures actually where anti I definitely shouldn't be needed anyway leaving the Indian anti I system switched on by mistake could cause some serious issues connected with the use of composite materials in certain parts of the engine cells specifically running the engine anti at higher than normal temperatures causes a risk of overheating which could potentially cause damage or even the failure of the engine inlet's inner barrel now I want to be really clear here as far as we know there have been no reports of any 737 Max actually having any inflight problems involving this issue and on top of that no airline has found any issues with the Nels of their 727 Max leet in postflight inspections or other maintenance processes but still this is a potential problem that has to be addressed so for existing already certified 727 Max aircraft we Pilots have been given procedures that limit the use of engine NTI during these type of conditions and we also have checklist to ensure that we remember those but this is of course a temporary fix Boeing and the FAA have agreed that Boeing will introduce a redesign an updated engine n cell design latest by May of 2026 once that is available then Airlines with the 727 Maxes will be able to retrofit their aircraft with these updated Nels removing the issue completely again all of this applies to existing 737 Max aircraft like the max-8 the max -9 and the 8200 but since the smallest version the max -7 haven't been certified yet Boeing asked the FAA to Grant a safety exemption which would allow it to enter service with the same engine n cells that are already flying with all the other Maxes and of course with the use of the same proced procedures for the pilots to mitigate that issue now since that design is currently in use Bing thoughts that the odds of actually getting this exemption was pretty high but even before the max 9 blowouts there was actually some skepticisms about allowing boing to go ahead with this new certification before the problem had been given a permanent fix and of course after the blowout that skepticism just grew exponentially even though that blowout had nothing to do with this particular issue but it likely left a very poor taste in the mouth of the people in charge to allow a safety exception of any sort after this kind of quality problem and a number of American lawmakers have now called them Bo to withdraw his requests for the exemption completely and finally boing did just that on the 29th of January this year so potentially this means that boing can't certify the 727 max7 and the max 10 until this fix is completed which could mean a delay into sometime in 2026 which would be a complete disaster when boing first launched the max 10 the largest Max variant it was supposed to enter service in 2020 with the max D7 even earlier than that already in 2019 so you can see why Airline customers could be a bit pissed here but there is a little bit of a bright possibility here like I mentioned before the development of of the tri 7x has also faced similar long delays but during the development the tri 7x is receiving a new composite wing and this means that Boeing has got a lot of new competence around building composite aircraft Parts this means that hopefully they will be able to speed up the development of this new Max engine Nel which is largely made from these exact composits because of that Bo CEO Dave Calhoun has recently been saying that the company can develop this new engine IND lets in less than a year if that is accurate well then the certification and entry into service of the 727 Max D7 will probably only be delayed by that much time about a year and the certification of the max-1 shouldn't be impacted at all since it was slated to be done around that time anyway of course this is all assuming that Bo's design and certification timeline for these updated Nels is actually realistic I would love to hear what you think about that in the comments below and while you're down there hit the like And subscribe Button as well but anyway no matter how we turn around we are now likely looking at more than a year more of delays and the airline that is going to be likely most hit by this is Southwest Airlines and of course since they are an only 737 operator it's very unlikely that they will be able to defect over to Airbus at this point anyway instead Southwest have already switched Max -7 delivery slots over to the -8 instead several times in in the past few years and they're now saying that they will continue doing this until the -7 is finally available because they really still want that smaller plane and while we're speaking of exemptions boing might well need another one of those very soon at the moment they're still making the 767 as a freighter but because of new emissions regulations they won't be able to make any more of those after 2027 unless they secure an exemption for it while they try to develop the 787 into a freighter to replace it the problem now is that with everything that has happened boing might find that it's going to be harder and harder to secure any exemptions like this in the future in this case they could try to re-engine the 767 which has a really interesting prospect that BJ FM is exploring in a series of Articles over on leham news as I always say you should definitely check out Liam news they're awesome but in the grand scheme of things as far as Bo's competition with Airbus is concerned this potential one-ear delay to the max-- 7 won't really make any difference but another development that has come as a direct result of the max -9 blowout actually does have potential to really affect all future Max customers and that as I'm sure that some of you have already guessed is the faa's decision to limit Boeing's production output while they investigate boing's quality control processes as I've explained in previous videos Boeing has traditionally been assembling all 737s in Renton all the way back since the late 1960s there are currently three assembly lines there although not all of them are running at full capacity but about a year ago Boeing announced plans for a fourth assembly line over in Everett where they have traditionally been making their wide body Jets up until recently there is obviously plenty of space available there since the production of the 747 stopped and all 787s are now made in South Carolina instead the reason for this expansion was that Boeing planned to increase its 737 production rate to 50 aircraft per month by 2025 or 26 in order to work on that backlog and thereby increase their cash flow in various sources boing's current monthly 737 output is reported to be 38 aircraft and that's the rate that the FAA has apparently approved but there is something here that was missed by some report as Aviation week pointed out boing is isn't actually making 38 737s per month right now instead boing's average for 2023 was only 28 737s per month which is the number of actual new rollouts not including the sales of previously stored Jets so why did Boeing 737 production slow down that much well one explanation are the quality control issues involving Spirits production of 737 fusiles which I covered in detail in a recent video but even in the last quarter of 2023 when most of those issues were already resolved boing's monthly 77 output was still only 24 per month still the FAA appears to have approved a monthly output of 38 737 so far so we'll see what happened to that anyway boing is now telling their suppliers to produce enough parts for as many as 42 Jets per month in order to build back some of their inventory and that by the way is something that Boeing has historically been trying to avoid at all costs in order to keep their cost of inventory down but the thing here is and the point that I'm trying to make is that even though boing agrees that this new FAA production limit is necessary it is a really huge blow for the company and their customers the reason boing really wanted to reach an output of 5737 per month was to avoid falling too far behind Airbus in 2023 Airbus averaged 48 A320 Neo family Jets per month for the entire year and and if we add to this 6 a220s that they also produce per month we get to a monthly output of 54 single Isis Jets that's nearly double the actual average of 737s that Boeing was producing during that same period I have previously said that if they're not careful Boeing could soon face a 40 to 60% Market split in favor of Airbus but the numbers that I just gave you are actually well worse than that nearly a 33 to 66% split and the orders that Airbus and boing scored in 2023 also shows that this trend is continuing on top of this Airbus isn't planning to stick to only 48 a320s and 6 a220s per year for very long instead by 2026 when boing was planning to make 50 737s Airbus is planning an output of 75 A320 NEOS and 12 to maybe 14 a 220s what all of this means is that boing now must achieve two really big targets firstly they need to make sure that they really can make that improved Nel design quickly enough so that it doesn't impact the certification of the max-1 and limits the max das7 to only one year of further delay but that of course isn't enough boing also needs to satisfy the FAA and the public that their quality control practices are fixed whilst they're doing that without doing this well if they can only barely handle the backlog of three 727 Max variants then adding another two into the mix probably won't help them that's why United Airlines which is the 727 Max -10 launch customer is now talking to Airbus about getting more or faster deliveries of a321 Neos instead and to possibly also cancel or scale back their Max 10 order which would obviously be hugely bad news for boing we'd already started working on alternative plans I think this is the STW the max Max 9 grounding is probably the straw that broke the campel back for us we're going to at least build a plan that doesn't have the max 10 in it remember as a launch customer United was originally expecting to start receiving their first Max 10 already back in 2020 and since Airlines plan their Fleet utilization extremely carefully not to get their aircraft when they're expecting it is a huge problem and it's not just United which is plagued by getting too few air craft in total the airline industry is short of around 3,000 aircraft globally compared to pre pandemic expectations for 2023 and 24 but of course that's not just because of boing obviously supply chain problems the war in Ukraine and of course the pandemic itself has had huge impact on those numbers But boing's continuing problems aren't making Airline buses and lessers any happier right now on top of all of this Boeing also have another matter better to keep in mind in September this year they will have to renew a 10-year agreement with the iam751 the Seattle Union chapter of the International Association of machinists and Aerospace workers those negotiations will start in March and they are never easy even at the best of time and as Liam news points out this time Bo's managements have basically no negotiating power without any plans for a new aircraft for example boing can't threaten their unions that they would build their aircraft elsewhere in the country or even abroad so this all sounds pretty Grim doesn't it so what can boing actually do and what about those thin Rays of Hope that I mentioned in the beginning of the video well there are actually a couple of rays but they are quite faint firstly boing were actually profitable in the last quarter of 2023 that was the first profitable quarter that they have had since since the max grounding early in 2019 of course the max das9 blowout in January killed that positive momentum quickly but they still claim that this is some progress after all of the pandemic and so many other supply chain issues that they faced secondly in terms of Boeing's competition there's only so much Airbus can actually do to take advantage of Boeing's vulnerable position as I've said before United CEO Scott Kirby flew to tulo after the Alaska Max blowout to talk to us about getting more a321 NEOS he did this because he could see how this incident could delay United's Max 10 order even further both for certification reasons and because Boeing would simply be unable to make jets fast enough but if they wanted to accommodate United Airbus would also have to find delivery slots for these new aircraft United already has orders for 130 Airbus a321 NEOS plus another 50 of the long range a321 xlrs and they started taking delivery of those first a321 NEOS only last year but these deliveries won't end until way into the 2030s to accelerate them Airbus can't simply increase the planes production rate they have to ask other customers if they would be okay with delaying their own orders which would be highly unlikely since as I said before the whole industry is short of aircraft right now a key Point here is that Airbus have to be mindful of the fact that increasing their aircraft production rate too much could also be dangerous for them firstly this would expose them and their suppliers to unforeseen Global events like what happened during the pandemic of 2020 Plus in the year of 2035 when new efficient engines like the CFM rise are expected to become available is just about 11 years away now which means that designing the new aircraft that will be able to use those engines isn't that far away anymore in other words Airbus has to balance scaling up production of its current single aisle designs with the knowledge that they gradually will need to start scaling them down again when time comes to set up the production line for whatever aircraft comes next but to summarize no matter how you see it Airbus clearly has the upper hand right now they could afford to just basically sit back and do nothing since they have a boatload of aircraft orders and Boeing aren't really in a position to threaten them anymore but the question is can boing afford to do the same thing boing used to be the manufacturer that even if the competition designed an aircraft that hit the market first their own designs and Engineering was so good that Airlines often decided to wait for them and their designs instead but with boing's current state and finances and the problems that they have faced over the last few years is this still the case can boing actually take their time and eventually bring to Market something really cool and Innovative that can turn the tables on Airbus let me know what you think I love hearing from you and if you like these type of deep dives into the industry and want to support what we do here on the channel then consider leaving a super chat using the dollar button here below or maybe buy yourself some merch or support our sponsor but if you really want to take part in the work that we do here well then you need to join my quality controllers over in my patreon crew there should be a link to do that here on the screen or or in the description below and I would love to see you in my next Zoom hangout have an absolutely fantastic day check out these videos next and I'll see you next time bye-bye

Channel: Mentour Now!

Views: 358,103

Keywords: airbus, boeing, aviation news, news explainers, aviation trends, aviation industry, airbus vs boeing, US aviation, mentour pilot, mentour now, air travel, spirit airlines, low fare carriers, united airlines, airports, Aviation revolution, New Tech, Fascinating Tech, Things you didnt know, Aviation history, air traffic controller, mentour pilot now, door plug, alaska airlines flight, alaska airlines, 737 MAX 9, spirit aerosystems, boeing 737, Boeing

Id: wNzVufBJR64

Length: 25min 41sec (1541 seconds)

Published: Sun Feb 18 2024