Pension plans for 68,000 nonunion Boeing workers, including 1,000 in North Charleston, will end in 2015, the company announced Thursday.
Participating employees will be switched to a 401(k)-style retirement savings plan instead on Jan. 1, 2016.
The decision affects about 15 percent of the 6,700 direct-hired Boeing South Carolina workers in North Charleston, company spokesman John Dern said.
"The reason it's relatively few is that all Boeing employees hired after 2009 are already part of the defined-contribution model," he said. "Of course, many in Charleston fall into that category since they are relative 'new hires.'"
All benefits earned in the pension plan before the transition will be paid to employees in retirement, and the company will continue to match employee savings in an existing 401(k) plan. Retirees already receiving pension benefits aren't affected.
The aerospace and defense giant has been moving away from pension plans to hold down costs and remain more competitive against French airplane-building firm Airbus. The move helps "Boeing to better predict and manage financial risks," the company said in a statement.
"Our objective in making this transition is twofold: continue providing an attractive, market-leading retirement benefit contributing to employees' retirement security, while also assuring our competitiveness by curbing the unsustainable growth of our long-term pension liability," said Tony Parasida, a Boeing senior vice president.
Similar changes were recently included in an eight-year contract extension ratified in January by members of the company's biggest union, the International Association of Machinists and Aerospace Workers District 751 in Seattle and the IAM District 837 in St. Louis.
The narrow vote came with the promise that Boeing would build its new long-range passenger jet, the 777X, and its composite wings in the Puget Sound area after Boeing threatened to move the work elsewhere if the union didn't agree to the new contract.
Source: http://www.postandcourier.com
Showing posts with label Boeing. Show all posts
Showing posts with label Boeing. Show all posts
Thursday, March 06, 2014
Monday, March 03, 2014
Jet Airways, SpiceJet Set to Make Boeing Orders: WSJ
The Wall Street Journal
By Gaurav Raghuvanshi
March 3, 2014 7:08 a.m. ET
India's unprofitable Jet Airways Ltd. and SpiceJet Ltd. are set to unveil dozens of new aircraft orders from Boeing Co., which is likely to turn up the competitive heat in the country's increasingly crowded airline industry.
The orders, which are worth US$8.3 billion at list prices, may be announced as early as next week at India's biggest commercial aviation show in the city of Hyderabad, people familiar with the matter said Monday. They said the orders could include about 30 Boeing 737-MAX single-aisle jets for SpiceJet, as well as a formal announcement of at least 50 planes of the same type for Jet Airways.
Another carrier, IndiGo, is also evaluating orders for more Airbus Group A320 jets, according to another person familiar with the situation, though the nation's biggest discount carrier by fleet size may not place its orders before the end of the first half.
The large orders reflect strong growth potential for India's airline industry, though the nation's domestic carriers continue to struggle.
Traffic growth is robust. Domestic travel between April and December rose 6% from a year earlier, while international traffic increased 10.7%, according to data from consulting firm CAPA — Centre for Aviation.
But India's airlines are strapped financially, having reported losses in the last three years as stiff competition forced them to discount tickets while excessive government regulation stunted growth.
SpiceJet reported a 1.73 billion-rupee (US$28 million) loss in the quarter that ended Dec. 31. The airline last reported an annual profit for the year that ended in March 2011.
Jet Airways, India's biggest premium carrier, last reported a consolidated annual profit for the year that ended in March 2007. Analysts expect the two airlines and flag carrier Air India Ltd. to report losses for the current financial year.
Competition among local carriers will likely intensify, after India's government last year allowed foreign airlines invest locally. Malaysia's AirAsia Bhd. and Singapore Airlines Ltd. have announced separate plans to enter the Indian market in partnership with local conglomerate Tata Group.
In addition to increasing competition and government regulation, India's airlines face high jet fuel charges and their airport fees are steep, especially at newly built terminals in New Delhi, Bangalore and Mumbai.
Spokesmen for Boeing, Jet Airways, SpiceJet and Indigo declined to comment Monday, while Airbus couldn't immediately be reached for comment.
Still, analysts say the industry has enormous growth potential if the country's sizable middle class chooses air travel over rail, which is the backbone of India's transportation infrastructure, despite being notoriously unreliable and inefficient.
"The losses of Indian carriers will not continue forever. The long-term outlook for the sector is extremely positive," said Amber Dubey, the head of aerospace and defense at consulting firm KPMG.
India is "getting increasingly aligned to global best practices in aviation and becoming a better place to do business in," said Mr. Dubey, noting he expects most policy problems to be resolved in the coming years.
Already, the Indian government has begun to liberalize the industry. It has allowed airlines to charge passengers for preferred seats and has permitted the A380, the world's biggest jet, to fly into India.
The government is also planning to abolish a rule that prohibits carriers from starting international service until they have a five-year track record of flying domestically and have at least 20 planes in their fleet.
Indian airlines are expected to order a combined 400 planes this year, according to CAPA, the consultancy. That compares with about 375 planes currently flying with the five national carriers.
Some of the orders will replace older aircraft. In some cases, the planes that are being replaced are only five or six years old. Many Asian budget airlines are increasingly opting to buy new aircraft and sell older planes to avoid hefty maintenance and overhaul costs.
The Indian deals likely to be announced next week will build on the more than 350 aircraft that Indian carriers have on order. The last major order by an Indian carrier was for 180 Airbus A320s by IndiGo, which was made in June 2011.
Source: http://online.wsj.com
By Gaurav Raghuvanshi
March 3, 2014 7:08 a.m. ET
India's unprofitable Jet Airways Ltd. and SpiceJet Ltd. are set to unveil dozens of new aircraft orders from Boeing Co., which is likely to turn up the competitive heat in the country's increasingly crowded airline industry.
The orders, which are worth US$8.3 billion at list prices, may be announced as early as next week at India's biggest commercial aviation show in the city of Hyderabad, people familiar with the matter said Monday. They said the orders could include about 30 Boeing 737-MAX single-aisle jets for SpiceJet, as well as a formal announcement of at least 50 planes of the same type for Jet Airways.
Another carrier, IndiGo, is also evaluating orders for more Airbus Group A320 jets, according to another person familiar with the situation, though the nation's biggest discount carrier by fleet size may not place its orders before the end of the first half.
The large orders reflect strong growth potential for India's airline industry, though the nation's domestic carriers continue to struggle.
Traffic growth is robust. Domestic travel between April and December rose 6% from a year earlier, while international traffic increased 10.7%, according to data from consulting firm CAPA — Centre for Aviation.
But India's airlines are strapped financially, having reported losses in the last three years as stiff competition forced them to discount tickets while excessive government regulation stunted growth.
SpiceJet reported a 1.73 billion-rupee (US$28 million) loss in the quarter that ended Dec. 31. The airline last reported an annual profit for the year that ended in March 2011.
Jet Airways, India's biggest premium carrier, last reported a consolidated annual profit for the year that ended in March 2007. Analysts expect the two airlines and flag carrier Air India Ltd. to report losses for the current financial year.
Competition among local carriers will likely intensify, after India's government last year allowed foreign airlines invest locally. Malaysia's AirAsia Bhd. and Singapore Airlines Ltd. have announced separate plans to enter the Indian market in partnership with local conglomerate Tata Group.
In addition to increasing competition and government regulation, India's airlines face high jet fuel charges and their airport fees are steep, especially at newly built terminals in New Delhi, Bangalore and Mumbai.
Spokesmen for Boeing, Jet Airways, SpiceJet and Indigo declined to comment Monday, while Airbus couldn't immediately be reached for comment.
Still, analysts say the industry has enormous growth potential if the country's sizable middle class chooses air travel over rail, which is the backbone of India's transportation infrastructure, despite being notoriously unreliable and inefficient.
"The losses of Indian carriers will not continue forever. The long-term outlook for the sector is extremely positive," said Amber Dubey, the head of aerospace and defense at consulting firm KPMG.
India is "getting increasingly aligned to global best practices in aviation and becoming a better place to do business in," said Mr. Dubey, noting he expects most policy problems to be resolved in the coming years.
Already, the Indian government has begun to liberalize the industry. It has allowed airlines to charge passengers for preferred seats and has permitted the A380, the world's biggest jet, to fly into India.
The government is also planning to abolish a rule that prohibits carriers from starting international service until they have a five-year track record of flying domestically and have at least 20 planes in their fleet.
Indian airlines are expected to order a combined 400 planes this year, according to CAPA, the consultancy. That compares with about 375 planes currently flying with the five national carriers.
Some of the orders will replace older aircraft. In some cases, the planes that are being replaced are only five or six years old. Many Asian budget airlines are increasingly opting to buy new aircraft and sell older planes to avoid hefty maintenance and overhaul costs.
The Indian deals likely to be announced next week will build on the more than 350 aircraft that Indian carriers have on order. The last major order by an Indian carrier was for 180 Airbus A320s by IndiGo, which was made in June 2011.
Source: http://online.wsj.com
Thursday, February 27, 2014
U.S. Durable Orders Fall in January ... Orders Rise Excluding Volatile Transportation Category
The Wall Street Journal
By Josh Mitchell And Ben Leubsdorf
Updated Feb. 27, 2014 8:44 a.m. ET
WASHINGTON—A drop in aircraft purchases tugged down overall durable-goods orders in January, but underlying figures suggested firms are slowly moving ahead with investment plans.
Orders for durable goods—products from kitchen appliances to bulldozers designed to last three years or more—fell a seasonally adjusted 1% from December, the Commerce Department said Thursday. That followed December's 5.3% tumble in overall orders.
But excluding the volatile transportation category, orders rose 1.1% last month, the strongest rise since May. Defense spending on capital goods was up sharply. Orders for computers and electronics climbed, but demand for machinery, primary metals and autos fell.
Economists surveyed by Dow Jones had forecast overall durable-goods orders to fall 2% in January.
Durable-goods orders can provide a clue about the direction of the economy, but the data can be choppy from month to month and are often revised. Broader trends suggest orders are rising modestly. From a year ago, overall durable-goods orders were up 2.4%.
The latest slide largely reflected a drop in civilian aircraft demand, with aircraft maker Boeing Co. seeing a big decline in orders last month from December. Aircraft orders tend to swing from month to month and can mask underlying demand in the economy.
Other data showed firms stepped up investment plans, which could lead factories to ramp up production in coming months. A closely watched measure of business spending—orders for nondefense capital goods excluding aircraft—climbed 1.7% in January, nearly reversing December's 1.8% fall. Orders in that category have climbed for two of the last three months—though from a year earlier, they were down 1.7% in January.
Businesses have maintained a cautious posture for much of the economic recovery since 2008 amid subdued consumer spending and weak demand overseas. Now, cold and snowy weather—along with a rise in borrowing costs—are presenting new hurdles to increased business investment.
An earlier report also hinted at factories hitting a lull after growing at a healthy pace late last year. The Institute for Supply Management's purchasing managers index fell sharply in January to a level indicating factory-sector activity barely expanded that month.
It is unclear how much the latest data reflect a fundamental weakness in the U.S. economy versus a temporary slowdown due to the cold weather. Other components of the economy, such as retail sales and the labor market, have also slowed recently after registering healthy growth in the second half of 2013.
Economists expect business spending, along with the broader economy, to pick up in the spring as the weather warms.
Sources:
http://www.census.gov
http://online.wsj.com
By Josh Mitchell And Ben Leubsdorf
Updated Feb. 27, 2014 8:44 a.m. ET
WASHINGTON—A drop in aircraft purchases tugged down overall durable-goods orders in January, but underlying figures suggested firms are slowly moving ahead with investment plans.
Orders for durable goods—products from kitchen appliances to bulldozers designed to last three years or more—fell a seasonally adjusted 1% from December, the Commerce Department said Thursday. That followed December's 5.3% tumble in overall orders.
But excluding the volatile transportation category, orders rose 1.1% last month, the strongest rise since May. Defense spending on capital goods was up sharply. Orders for computers and electronics climbed, but demand for machinery, primary metals and autos fell.
Economists surveyed by Dow Jones had forecast overall durable-goods orders to fall 2% in January.
Durable-goods orders can provide a clue about the direction of the economy, but the data can be choppy from month to month and are often revised. Broader trends suggest orders are rising modestly. From a year ago, overall durable-goods orders were up 2.4%.
The latest slide largely reflected a drop in civilian aircraft demand, with aircraft maker Boeing Co. seeing a big decline in orders last month from December. Aircraft orders tend to swing from month to month and can mask underlying demand in the economy.
Other data showed firms stepped up investment plans, which could lead factories to ramp up production in coming months. A closely watched measure of business spending—orders for nondefense capital goods excluding aircraft—climbed 1.7% in January, nearly reversing December's 1.8% fall. Orders in that category have climbed for two of the last three months—though from a year earlier, they were down 1.7% in January.
Businesses have maintained a cautious posture for much of the economic recovery since 2008 amid subdued consumer spending and weak demand overseas. Now, cold and snowy weather—along with a rise in borrowing costs—are presenting new hurdles to increased business investment.
An earlier report also hinted at factories hitting a lull after growing at a healthy pace late last year. The Institute for Supply Management's purchasing managers index fell sharply in January to a level indicating factory-sector activity barely expanded that month.
It is unclear how much the latest data reflect a fundamental weakness in the U.S. economy versus a temporary slowdown due to the cold weather. Other components of the economy, such as retail sales and the labor market, have also slowed recently after registering healthy growth in the second half of 2013.
Economists expect business spending, along with the broader economy, to pick up in the spring as the weather warms.
Sources:
http://www.census.gov
http://online.wsj.com
Wednesday, February 26, 2014
Rolls-Royce Unveils New Engine for Future Boeing, Airbus Jets
Rolls-Royce Holdings Plc, the world’s No. 2 commercial jet-engine maker, will pursue geared turbofan technology championed by rival Pratt & Whitney as it seeks to power future Boeing Co. and Airbus Group NV aircraft.
The so-called UltraFan would be available from 2025 and offer about 10 percent greater efficiency than the TrentXWB, the engine maker’s most modern turbine, said Simon Carlisle, executive vice president for future programs at Rolls-Royce’s civil aerospace division. The UltraFan would build on the so-called Advanced engine, a technology upgrade due from 2020.
“The demands of the industry are becoming much greater,” Carlisle said. “We need to make sure we don’t stand still.”
Rolls-Royce has focused on powering long-range airliners, with engines on the Boeing 787 Dreamliner, Airbus A380 superjumbo and the A350 that is due to begin commercial operation this year. The company has 2,500 Trent-family engines in service and orders for the same number to come.
The London-based manufacturer faces competition to power future aircraft, with General Electric Co. the exclusive provider for the Boeing 777X, the largest twin-engine plane due around 2020. Pratt & Whitney, United Technologies Corp.’s engine arm, is also seeking wide-body applications for its geared turbofan technology on narrow-bodies.
The new Rolls-Royce offerings are not aimed at a specific plane from Airbus or Boeing, Carlisle said. Airbus has said it is exploring re-engining programs for its A380 and A330 wide-bodies.
Single-Aisle Return
Rolls-Royce, which spends about 1 billion pounds ($1.7 billion) on technology research each year, will run a test engine in 2015 to help mature the 2020 powerplant, with a trial UltraFan to come toward the end of the decade, Carlisle said at the company’s civil aerospace center in Derby.
Chief Executive Officer John Rishton has made cost control a priority as the company faces a year of no growth in 2014 for the first time in a decade. The new programs will not cause a spike in capital requirements, Carlisle said.
Technologies could flow into future engines to power the more ubiquitous single-aisle market, where Rolls-Royce has retrenched after exiting the International Aero Engines joint venture led by Pratt & Whitney. Carlisle said returning to that market is “absolutely” planned.
The new engine will include technologies including composite fan blades and casing that will save about 750 pounds in weight per turbine. Design improvements also should eliminate the need for thrust reversers.
Source: http://www.businessweek.com
The so-called UltraFan would be available from 2025 and offer about 10 percent greater efficiency than the TrentXWB, the engine maker’s most modern turbine, said Simon Carlisle, executive vice president for future programs at Rolls-Royce’s civil aerospace division. The UltraFan would build on the so-called Advanced engine, a technology upgrade due from 2020.
“The demands of the industry are becoming much greater,” Carlisle said. “We need to make sure we don’t stand still.”
Rolls-Royce has focused on powering long-range airliners, with engines on the Boeing 787 Dreamliner, Airbus A380 superjumbo and the A350 that is due to begin commercial operation this year. The company has 2,500 Trent-family engines in service and orders for the same number to come.
The London-based manufacturer faces competition to power future aircraft, with General Electric Co. the exclusive provider for the Boeing 777X, the largest twin-engine plane due around 2020. Pratt & Whitney, United Technologies Corp.’s engine arm, is also seeking wide-body applications for its geared turbofan technology on narrow-bodies.
The new Rolls-Royce offerings are not aimed at a specific plane from Airbus or Boeing, Carlisle said. Airbus has said it is exploring re-engining programs for its A380 and A330 wide-bodies.
Single-Aisle Return
Rolls-Royce, which spends about 1 billion pounds ($1.7 billion) on technology research each year, will run a test engine in 2015 to help mature the 2020 powerplant, with a trial UltraFan to come toward the end of the decade, Carlisle said at the company’s civil aerospace center in Derby.
Chief Executive Officer John Rishton has made cost control a priority as the company faces a year of no growth in 2014 for the first time in a decade. The new programs will not cause a spike in capital requirements, Carlisle said.
Technologies could flow into future engines to power the more ubiquitous single-aisle market, where Rolls-Royce has retrenched after exiting the International Aero Engines joint venture led by Pratt & Whitney. Carlisle said returning to that market is “absolutely” planned.
The new engine will include technologies including composite fan blades and casing that will save about 750 pounds in weight per turbine. Design improvements also should eliminate the need for thrust reversers.
Source: http://www.businessweek.com
Tuesday, February 25, 2014
Problems Linger For Boeing's Flagship 787 Airliner
Despite more than a decade to work out problems and an estimated $20 billion to build it, Boeing's 787 aircraft is still plagued by issues.
The high-tech, fuel-efficient airplane was supposed to be a game changer in the aviation industry — and it still may be — but it keeps making headlines for all the wrong reasons.
Ever since 787s finally began flying in 2011, there have been technical and mechanical problems, from software bugs and engine defects to faulty wiring, trouble with hydraulics and fuel tank leaks.
"The lingering problems run the gamut from insignificant to highly significant. And it's a roll of the dice at this point what the next one's going to be," says aviation writer Christine Negroni, who has covered the issues on her blog, Flying Lessons.
The biggest problem was with the planes' lithium ion batteries, which caught fire on two of the aircraft a year ago, leading regulators to ground the entire 787 fleet worldwide for more than three months.
Made largely from carbon fiber and other composites, the 787 is lighter, more fuel-efficient and has a greater range than aluminum planes. It also has a new engine design and gives passengers larger windows and more comfort. The 787 fills a void for many airlines, giving them a long-haul, wide-body airplane with a lower operating cost, Negroni says.
The 787's problems date to the concept's introduction more than a decade ago. Design flaws, kinks in the supply chain and manufacturing troubles delayed its production by years.
"People defend the airplane by saying it's just teething problems," Negroni says. "I don't know of another airplane that was grounded for 3 1/2 months because they were concerned about fire in flight."
The plane went back into service even though critics say Boeing never fixed the problem. Instead, it just built a box around the battery to better contain any fire, added a system to ventilate smoke and fumes, and spaced the battery cells farther apart.
And sure enough, last month, another battery overheated, sending smoke outside the plane.
In addition to the chronic reliability problems, Negroni says some of the airlines flying the plane, including LOT in Poland, are finding the 787, known as the Dreamliner, to be a publicity nightmare.
"The CEO of LOT said to me, 'Flying the Dreamliner is like dating Paris Hilton. Everything you do makes news,' " Negroni says. "Even if it's a minor issue on the Dreamliner, it's a headline."
In an emailed statement, a Boeing spokesman acknowledges problems but says that improving dependability of the 787 "is at the top of our priorities and we're making good progress at reducing those reliability issues."
The aerospace giant says that after years of delays, the company is "on track to meet all delivery commitments in 2014," now producing 787s at a record rate of 10 per month.
But the ramped-up production pace apparently comes with a cost.
Union machinists on the 787 assembly line in Everett, Wash., say they're getting incomplete fuselage sections of the plane from Boeing's new nonunion plant in South Carolina. Some of the plane sections have bad wiring or poorly installed hydraulics lines, they say.
"There's no question that Boeing management underestimated the difficulty of this approach to building the 787," says Richard Aboulafia, vice president of analysis at the Teal Group.
Aboulafia says Boeing made a mistake when it fired hundreds of experienced contract employees last year to cut costs. Now, the company is hiring some of them back and adding new contract workers to address the production problems in South Carolina.
A handful of airlines, including Air India and Norwegian Air, want compensation from Boeing for problems. Still, at a list price of over $200 million each, orders are still strong, Aboulafia says.
"You've still got over 800 planes on order. That's pretty impressive," he says.
Among the happy customers is United Airlines, which has nine of the airplanes in service and has ordered dozens more.
"It is by far the most popular aircraft in our fleet for both customers and employees," says United spokeswoman Christen David. The airplane allows United to add new direct routes to China, Australia and Nigeria, David says.
So how's this for confidence in the plane? After signing a $155 million contract to play for the Yankees a few weeks ago, Japanese baseball star Masahiro Tanaka spent nearly $200,000 to charter a 787 to New York.
Story, photo, audio and comments/reaction: http://www.npr.org
Airbus faces tough battles over A330 longevity plan
(Reuters) - As Airbus races through flight testing of its newest plane, the next-generation A350, Europe's planemaker faces growing battles to secure a future for the A330, until now its only truly lucrative wide-body jet.
Twenty years after it entered service, the 250 to 300-seat jet has repeatedly been pronounced dead by rival Boeing but refuses to lie down, outliving its A340 sibling and surviving for now the arrival of lighter new jets like Boeing's 787 and the A350.
But analysts say time is finally ticking on Airbus's most profitable wide-body jet, despite a steady series of changes aimed at prolonging the end of its production cycle and with over 1,000 still in service.
Without a fresh burst of sales or a slowdown from current record production levels, they say, Airbus faces a sharp drop in deliveries from 2016 onwards, with the visible backlog of undelivered aircraft now worth just 26 months of production.
"The A330 had an amazing past five years, not only because of its merits, but because Boeing's 787 was delayed," said industry analyst Richard Aboulafia at Teal Group.
"But with the 787 hitting (its targeted) production of 10 aircraft per month, that is going to crowd the A330 out of the market space pretty quickly," he added.
That leaves Airbus with a two-fold challenge. It must decide
how best to maintain a foothold in the 200 to 300-seat market, where it first developed jets more than 40 years ago and which Boeing later targeted in part with its 787 family.
The version of the A350 that Airbus originally hoped would defend that spot, the 270-seat A350-800, has sold poorly and is likely to remain sidelined compared to the 314-seat A350-900.
And with the A350 only gradually building up output until 2018, experts say Airbus faces a hole in revenue and cash flow as a gap opens between peak output of the A330 and that of the A350 -just as it also wrestles with a complex transition between versions of its other main cash cow, the A320.
Even though orders may not be as bleak as they appear, with some countries still to approve deals, Airbus has already started looking at ways of heading off any output gaps.
Last year it broke from a pattern of beefing up the A330 to fly further with more payload and announced a leaner Regional version to compete in the key Chinese domestic market.
Ostensibly the aircraft is the same, but its performance will be artificially capped to help save airlines save on maintenance and statutory bills like landing fees.
Such an aircraft would be a niche product aimed at countries with congested domestic markets like China and India.
Morphing the plane in a different direction, Airbus is also looking at the possibility of new engines to boost performance in its core activity of flying medium- and long-haul routes.
It has given itself until the end of the year to make a decision but could make a move at Farnborough Airshow in July.
COUNTER-OFFENSIVE
But industry sources say Airbus has already raised the stakes by offering to increase its industrial presence in China with an A330 cabin center. It already assembles small jets there.
"We have always been open to additional industrial co-operation when the market supports it," Chief Executive Fabrice Bregier said at the recent Singapore Airshow, asked about the first report of such a proposal in Aviation Week.
In response, market watchers say Boeing has launched a counter-offensive to halt the A330's latest assault on China.
Officials with the U.S. firm acknowledge that Airbus's A330 Regional would save just over 10 percent in operating costs.
But they argue this would not compensate for the extra fuel needed for a heavy aircraft like the A330 when it is operating on short routes instead of the long ones it was designed for.
Adapting the industry playbook, they say it would be more profitable to fly two smaller Boeing 737s instead, because the Airbus would burn 12 percent more fuel than both combined.
Airbus officials argue that China's crowded skies and airport congestion rule out adding flights, so the only option is to boost capacity. About 80 percent of China's airspace is under military control, leaving scarce room for traffic development.
That could be changing as China seeks to boost the low-cost airline sector but there is no clear-cut rule on whether more flights are the right marketing tool, said Ascend analyst Rob Morris.
STRATEGIC MARKET, TACTICAL TOOLS
But critics of Airbus's plans have a fallback argument.
Boeing, they say, is likely to try to persuade Chinese airlines that even if they want to put A330s on domestic routes to ease congestion it would be better for their balance sheets and more practical to redeploy them from international ones, rather than buy even more A330s with declining resale values.
Airbus officials counter that it would cost millions of dollars to reconfigure jets in that way.
China is one of the most strategic markets for both companies but analysts say they are also behaving tactically.
Both have gambled on lighter weight carbon-fiber technology but are unable to deliver as quickly as airlines would like, and are meanwhile carving out sales pitches playing up their existing products.
The battle looks set to revive tensions between the two dominant planemakers in the $100 billion annual jetliner market that last erupted in an advertising war in 2012.
Taking aim at Airbus's flexibility over pricing of the A330, whose development was paid for long ago, a Boeing executive said it would be a "losing proposition" against the smaller 737 in China, even if Airbus gave up any gap in price.
An Airbus official retorted curtly, saying Boeing's own data was "veracity-challenged".
Source: http://www.reuters.com
Twenty years after it entered service, the 250 to 300-seat jet has repeatedly been pronounced dead by rival Boeing but refuses to lie down, outliving its A340 sibling and surviving for now the arrival of lighter new jets like Boeing's 787 and the A350.
But analysts say time is finally ticking on Airbus's most profitable wide-body jet, despite a steady series of changes aimed at prolonging the end of its production cycle and with over 1,000 still in service.
Without a fresh burst of sales or a slowdown from current record production levels, they say, Airbus faces a sharp drop in deliveries from 2016 onwards, with the visible backlog of undelivered aircraft now worth just 26 months of production.
"The A330 had an amazing past five years, not only because of its merits, but because Boeing's 787 was delayed," said industry analyst Richard Aboulafia at Teal Group.
"But with the 787 hitting (its targeted) production of 10 aircraft per month, that is going to crowd the A330 out of the market space pretty quickly," he added.
That leaves Airbus with a two-fold challenge. It must decide
how best to maintain a foothold in the 200 to 300-seat market, where it first developed jets more than 40 years ago and which Boeing later targeted in part with its 787 family.
The version of the A350 that Airbus originally hoped would defend that spot, the 270-seat A350-800, has sold poorly and is likely to remain sidelined compared to the 314-seat A350-900.
And with the A350 only gradually building up output until 2018, experts say Airbus faces a hole in revenue and cash flow as a gap opens between peak output of the A330 and that of the A350 -just as it also wrestles with a complex transition between versions of its other main cash cow, the A320.
Even though orders may not be as bleak as they appear, with some countries still to approve deals, Airbus has already started looking at ways of heading off any output gaps.
Last year it broke from a pattern of beefing up the A330 to fly further with more payload and announced a leaner Regional version to compete in the key Chinese domestic market.
Ostensibly the aircraft is the same, but its performance will be artificially capped to help save airlines save on maintenance and statutory bills like landing fees.
Such an aircraft would be a niche product aimed at countries with congested domestic markets like China and India.
Morphing the plane in a different direction, Airbus is also looking at the possibility of new engines to boost performance in its core activity of flying medium- and long-haul routes.
It has given itself until the end of the year to make a decision but could make a move at Farnborough Airshow in July.
COUNTER-OFFENSIVE
But industry sources say Airbus has already raised the stakes by offering to increase its industrial presence in China with an A330 cabin center. It already assembles small jets there.
"We have always been open to additional industrial co-operation when the market supports it," Chief Executive Fabrice Bregier said at the recent Singapore Airshow, asked about the first report of such a proposal in Aviation Week.
In response, market watchers say Boeing has launched a counter-offensive to halt the A330's latest assault on China.
Officials with the U.S. firm acknowledge that Airbus's A330 Regional would save just over 10 percent in operating costs.
But they argue this would not compensate for the extra fuel needed for a heavy aircraft like the A330 when it is operating on short routes instead of the long ones it was designed for.
Adapting the industry playbook, they say it would be more profitable to fly two smaller Boeing 737s instead, because the Airbus would burn 12 percent more fuel than both combined.
Airbus officials argue that China's crowded skies and airport congestion rule out adding flights, so the only option is to boost capacity. About 80 percent of China's airspace is under military control, leaving scarce room for traffic development.
That could be changing as China seeks to boost the low-cost airline sector but there is no clear-cut rule on whether more flights are the right marketing tool, said Ascend analyst Rob Morris.
STRATEGIC MARKET, TACTICAL TOOLS
But critics of Airbus's plans have a fallback argument.
Boeing, they say, is likely to try to persuade Chinese airlines that even if they want to put A330s on domestic routes to ease congestion it would be better for their balance sheets and more practical to redeploy them from international ones, rather than buy even more A330s with declining resale values.
Airbus officials counter that it would cost millions of dollars to reconfigure jets in that way.
China is one of the most strategic markets for both companies but analysts say they are also behaving tactically.
Both have gambled on lighter weight carbon-fiber technology but are unable to deliver as quickly as airlines would like, and are meanwhile carving out sales pitches playing up their existing products.
The battle looks set to revive tensions between the two dominant planemakers in the $100 billion annual jetliner market that last erupted in an advertising war in 2012.
Taking aim at Airbus's flexibility over pricing of the A330, whose development was paid for long ago, a Boeing executive said it would be a "losing proposition" against the smaller 737 in China, even if Airbus gave up any gap in price.
An Airbus official retorted curtly, saying Boeing's own data was "veracity-challenged".
Source: http://www.reuters.com
Saturday, February 15, 2014
Opinion: Boeing and the betrayal of labor
Published: Saturday, February 15, 2014, 1:00 a.m.
By Mike Lapointe
Since this whole sordid misadventure in landing the 777 production line began, I have followed the events as they unraveled. Never had I seen such a coordinated effort which included members of our political establishment, leaders in the upper echelon of a union which had forgotten they are but the empowered representatives of the rank and file, and at the core of these despicable acts, the Boeing executives.
You can take a stand for or against Boeing, the top union leadership and the politicians, but to me, in the end, the discussion must turn towards integrity, leadership and values when addressing culpability. Where was the integrity of our politicians when they stood next to Boeing and participated in spreading fear for one’s job? Why did they not stand with the workers who campaigned and voted for them?
Everett’s mayor claimed to have seen the contract and determined it was worth accepting “in his heart of hearts.” That is clearly untrue as the details of the agreement were not even finalized as the vote was being rammed through. For all we know it is still not finalized. New contracts are available about two weeks after any settlement, but this one has yet to be seen on the shop floor.
Congressman Larsen told the workers they had to take the contract because Boeing would leave; rejection of the takeaways rendering the company unable to compete. This is also a falsehood. Put in the simplest context to understand clearly, the workers traditional pension accounts for about a fraction of 1 percent of the total labor cost per jetliner that comes off the production line. Labor cost per jetliner is around 5 percent of the total.
Some in leadership positions within the Union, tasked with representing the interest of the membership, failed in their responsibility! Lack of a true democratic structure that places power in the hands of the rank and file has been a serious problem in many unions over the years. But now there is an opportunity to remove the IAM entrenched incumbents by voting them out in upcoming elections and restoring power to where it belongs, on the shop floor. The workers have been wronged, this vote, which should never have taken place, must be reversed and those responsible for forcing the vote must be held accountable.
Boeing executives who are the instigators of these nefarious actions must be asked the question, “What are your values?” Attacking the hard fought for and well deserved gains of the workers who made Boeing profitable over decades, is not how one rewards those who created their wealth.
In 2008, the Wall Street bankers and financiers crashed our economy without even one major conspirator held accountable. Now we have Boeing taking advantage of the tough economic times to further ravage our state and its citizens. The wealth inequality the elite have created is an economic threat to our nation and it must be addressed.
Boeing workers have been hit from all sides with betrayal, intimidation and suppression of their rights. And so have we all. Boeing, our politicians, and the IAM’s compromised union leadership are forcing our hand. Union members and the community must unify to protect ourselves. The Wobblies motto, “An injury to one is an injury to all” rings true more so today than it did over 100 years ago. We must continue to speak up and spread the word of this injustice until it is wiped from the slate.
Mike Lapointe lives in Everett
Article and comments/reaction: http://www.heraldnet.com
By Mike Lapointe
Since this whole sordid misadventure in landing the 777 production line began, I have followed the events as they unraveled. Never had I seen such a coordinated effort which included members of our political establishment, leaders in the upper echelon of a union which had forgotten they are but the empowered representatives of the rank and file, and at the core of these despicable acts, the Boeing executives.
You can take a stand for or against Boeing, the top union leadership and the politicians, but to me, in the end, the discussion must turn towards integrity, leadership and values when addressing culpability. Where was the integrity of our politicians when they stood next to Boeing and participated in spreading fear for one’s job? Why did they not stand with the workers who campaigned and voted for them?
Everett’s mayor claimed to have seen the contract and determined it was worth accepting “in his heart of hearts.” That is clearly untrue as the details of the agreement were not even finalized as the vote was being rammed through. For all we know it is still not finalized. New contracts are available about two weeks after any settlement, but this one has yet to be seen on the shop floor.
Congressman Larsen told the workers they had to take the contract because Boeing would leave; rejection of the takeaways rendering the company unable to compete. This is also a falsehood. Put in the simplest context to understand clearly, the workers traditional pension accounts for about a fraction of 1 percent of the total labor cost per jetliner that comes off the production line. Labor cost per jetliner is around 5 percent of the total.
Some in leadership positions within the Union, tasked with representing the interest of the membership, failed in their responsibility! Lack of a true democratic structure that places power in the hands of the rank and file has been a serious problem in many unions over the years. But now there is an opportunity to remove the IAM entrenched incumbents by voting them out in upcoming elections and restoring power to where it belongs, on the shop floor. The workers have been wronged, this vote, which should never have taken place, must be reversed and those responsible for forcing the vote must be held accountable.
Boeing executives who are the instigators of these nefarious actions must be asked the question, “What are your values?” Attacking the hard fought for and well deserved gains of the workers who made Boeing profitable over decades, is not how one rewards those who created their wealth.
In 2008, the Wall Street bankers and financiers crashed our economy without even one major conspirator held accountable. Now we have Boeing taking advantage of the tough economic times to further ravage our state and its citizens. The wealth inequality the elite have created is an economic threat to our nation and it must be addressed.
Boeing workers have been hit from all sides with betrayal, intimidation and suppression of their rights. And so have we all. Boeing, our politicians, and the IAM’s compromised union leadership are forcing our hand. Union members and the community must unify to protect ourselves. The Wobblies motto, “An injury to one is an injury to all” rings true more so today than it did over 100 years ago. We must continue to speak up and spread the word of this injustice until it is wiped from the slate.
Mike Lapointe lives in Everett
Article and comments/reaction: http://www.heraldnet.com
Tuesday, February 11, 2014
Boeing Says Air India Unhappy With 787 Dreamliner’s Performance
Boeing Co. said Air India Ltd. is dissatisfied with the performance of its 787 Dreamliner, joining other carriers including Norwegian Air Shuttle ASA in slamming the manufacturer for repeated faults on its marquee jet.
“Yes, they are not happy with the reliability portion, neither are we,” Dinesh Keskar, a senior vice president at the Chicago-based planemaker, said in an interview at the Singapore Air Show today. “Over the last few months, we understood which are the components that were causing issues, which software needs to be upgraded.”
The Dreamliner has experienced a series of malfunctions since its debut in 2011, including a three-month grounding of the global fleet last year after battery meltdowns on two planes. Air India, which hasn’t reported an annual profit since 2007, and low-cost airliner Norwegian Air built their growth plans around the composite-material airliner and its promise of more fuel-efficient operation
Air India diverted one of its 787s to Kuala Lumpur this month as a precaution after a software fault on a flight to New Delhi from Melbourne. Boeing is upgrading software and changing some components on Air India 787s whenever the planes can be taken out of service, Keskar said, adding that a 13th Dreamliner will be delivered to the carrier this month.
Missing Mark
Air India, which has ordered 27 Dreamliners, will seek compensation from Boeing after the carrier found that its 787s aren’t as fuel efficient as the planemaker had claimed while selling them, The Times of India reported today, citing officials it didn’t identify. G. P. Rao,, a spokesman at Air India, wasn’t immediately available to comment.
Fuel efficiency of the Dreamliner is improving after earlier models didn’t “quite make the mark” on this count, Keskar said.
The 787 is the first jetliner built chiefly of composite materials rather than traditional aluminum. It also relies to a greater degree than other jets on electricity to run the plane’s systems, putting a spotlight on the lithium-ion batteries.
Mumbai-based Air India has sparred with Boeing over compensation for tardy deliveries. Even so, Keskar said Boeing sees potential aircraft deals in India later this year. The company is in advanced talks with discount carrier SpiceJet Ltd. and Jet Airways (India) Ltd., the nation’s biggest publicly traded airline, to sell 737 Max jets.
In January, Japan Airlines Co., one of the biggest operators of the Dreamliner, found a battery cell in an empty jet smoking during preflight maintenance. Last year’s grounding added to a history of setbacks for the Dreamliner, whose entry into commercial service in 2011 for Tokyo-based ANA Holdings Inc. was more than 3 1/2 years late because of production snags.
Boeing will increase its prediction for India plane demand in the next couple of months, Keskar said in Singapore today. The company had forecast last year that carriers in the Asian nation will need 1,450 new aircraft, worth $175 billion over the next two decades.
Story and comments/reaction: http://www.bloomberg.com
“Yes, they are not happy with the reliability portion, neither are we,” Dinesh Keskar, a senior vice president at the Chicago-based planemaker, said in an interview at the Singapore Air Show today. “Over the last few months, we understood which are the components that were causing issues, which software needs to be upgraded.”
The Dreamliner has experienced a series of malfunctions since its debut in 2011, including a three-month grounding of the global fleet last year after battery meltdowns on two planes. Air India, which hasn’t reported an annual profit since 2007, and low-cost airliner Norwegian Air built their growth plans around the composite-material airliner and its promise of more fuel-efficient operation
Air India diverted one of its 787s to Kuala Lumpur this month as a precaution after a software fault on a flight to New Delhi from Melbourne. Boeing is upgrading software and changing some components on Air India 787s whenever the planes can be taken out of service, Keskar said, adding that a 13th Dreamliner will be delivered to the carrier this month.
Missing Mark
Air India, which has ordered 27 Dreamliners, will seek compensation from Boeing after the carrier found that its 787s aren’t as fuel efficient as the planemaker had claimed while selling them, The Times of India reported today, citing officials it didn’t identify. G. P. Rao,, a spokesman at Air India, wasn’t immediately available to comment.
Fuel efficiency of the Dreamliner is improving after earlier models didn’t “quite make the mark” on this count, Keskar said.
The 787 is the first jetliner built chiefly of composite materials rather than traditional aluminum. It also relies to a greater degree than other jets on electricity to run the plane’s systems, putting a spotlight on the lithium-ion batteries.
Mumbai-based Air India has sparred with Boeing over compensation for tardy deliveries. Even so, Keskar said Boeing sees potential aircraft deals in India later this year. The company is in advanced talks with discount carrier SpiceJet Ltd. and Jet Airways (India) Ltd., the nation’s biggest publicly traded airline, to sell 737 Max jets.
In January, Japan Airlines Co., one of the biggest operators of the Dreamliner, found a battery cell in an empty jet smoking during preflight maintenance. Last year’s grounding added to a history of setbacks for the Dreamliner, whose entry into commercial service in 2011 for Tokyo-based ANA Holdings Inc. was more than 3 1/2 years late because of production snags.
Boeing will increase its prediction for India plane demand in the next couple of months, Keskar said in Singapore today. The company had forecast last year that carriers in the Asian nation will need 1,450 new aircraft, worth $175 billion over the next two decades.
Story and comments/reaction: http://www.bloomberg.com
Boeing Considering 787-Size Medium-Range Jetliners
Boeing is Studying the Feasibility of Midrange Jets Similar in Size to Flagship 787.
The Wall Street Journal
By Jeffrey Ng
Feb. 11, 2014 3:33 a.m. ET
SINGAPORE— Boeing Co. is studying the feasibility of a medium-range jetliner that is similar in size to its flagship 787 long-haul jets because of strong customer interest, its top commercial aircraft salesman said Tuesday.
The U.S. aircraft manufacturing giant hasn't developed a successor to its midrange Boeing 757 jets, which seat up to 230 passengers, since the company stopped production of the popular plane in 2004, though hundreds are still flying today.
Instead, Boeing has in recent years focused more on revamping its highly successful but smaller 737 series jets and on its long-haul widebodies, such as the 787s and the 777s. But some customers are now asking about a possible midrange option.
"There may be a marketplace...in an airplane that doesn't have the range capability of a 787...but in the size category of 200 to 300 seats," said John Wojick, who heads global sales of commercial aircraft at Boeing, at the Singapore Airshow.
Mr. Wojick said there are many markets in Asia with routes between 4,000 and 5,000 miles in length that would suit such a midrange plane. However, he said the aircraft maker remains in "the study phase and the customer requirement phase" and no decisions have been made on whether to proceed.
"We've got an awful lot of discussions to go with our customers on what the size of that market may be and what kind of interest there is," said Mr. Wojick, noting that this is one of many studies Boeing is undertaking on new aircraft.
For now, Boeing is working on boosting the reliability of its technologically-advanced 787 jets following a spate of technical incidents involving the jets. Meanwhile, the plane maker is trying to fill new orders for its recently-launched 777X, the latest variant of its twin-engine long-haul jetliner.
So far, Boeing has secured firm orders from five international airlines for the new jet, and Mr. Wojick says the company is trying to pitch to existing operators of the 777-300 extended range planes for new orders. One airline Boeing is in discussions with is Singapore Airlines Ltd which is looking to phase some of its older generation 777s that joined its fleet in the 1990s.
"We spent an awful lot of time speaking to (Singapore Airlines) about the 777X," said Mr. Wojick, noting that Boeing is working hard to secure orders from the premium airline. Singapore Airlines said Tuesday that any discussions it has with aircraft manufacturers are kept confidential.
On the production side, Boeing is also busy fulfilling its large production backlog of orders, which stands at 5,080 planes. The company said it expects to deliver a record 715-725 planes this year, up from 638 last year.
Many of Boeing's orders are coming from emerging markets in Southeast Asia, which fueled a proliferation of low-cost airline travel in the region. While some Asian currencies have weakened significantly in recent months, Mr. Wojick said he is "not seeing a whole lot of impact from our customers on that level."
Source: http://online.wsj.com
The Wall Street Journal
By Jeffrey Ng
Feb. 11, 2014 3:33 a.m. ET
SINGAPORE— Boeing Co. is studying the feasibility of a medium-range jetliner that is similar in size to its flagship 787 long-haul jets because of strong customer interest, its top commercial aircraft salesman said Tuesday.
The U.S. aircraft manufacturing giant hasn't developed a successor to its midrange Boeing 757 jets, which seat up to 230 passengers, since the company stopped production of the popular plane in 2004, though hundreds are still flying today.
Instead, Boeing has in recent years focused more on revamping its highly successful but smaller 737 series jets and on its long-haul widebodies, such as the 787s and the 777s. But some customers are now asking about a possible midrange option.
"There may be a marketplace...in an airplane that doesn't have the range capability of a 787...but in the size category of 200 to 300 seats," said John Wojick, who heads global sales of commercial aircraft at Boeing, at the Singapore Airshow.
Mr. Wojick said there are many markets in Asia with routes between 4,000 and 5,000 miles in length that would suit such a midrange plane. However, he said the aircraft maker remains in "the study phase and the customer requirement phase" and no decisions have been made on whether to proceed.
"We've got an awful lot of discussions to go with our customers on what the size of that market may be and what kind of interest there is," said Mr. Wojick, noting that this is one of many studies Boeing is undertaking on new aircraft.
For now, Boeing is working on boosting the reliability of its technologically-advanced 787 jets following a spate of technical incidents involving the jets. Meanwhile, the plane maker is trying to fill new orders for its recently-launched 777X, the latest variant of its twin-engine long-haul jetliner.
So far, Boeing has secured firm orders from five international airlines for the new jet, and Mr. Wojick says the company is trying to pitch to existing operators of the 777-300 extended range planes for new orders. One airline Boeing is in discussions with is Singapore Airlines Ltd which is looking to phase some of its older generation 777s that joined its fleet in the 1990s.
"We spent an awful lot of time speaking to (Singapore Airlines) about the 777X," said Mr. Wojick, noting that Boeing is working hard to secure orders from the premium airline. Singapore Airlines said Tuesday that any discussions it has with aircraft manufacturers are kept confidential.
On the production side, Boeing is also busy fulfilling its large production backlog of orders, which stands at 5,080 planes. The company said it expects to deliver a record 715-725 planes this year, up from 638 last year.
Many of Boeing's orders are coming from emerging markets in Southeast Asia, which fueled a proliferation of low-cost airline travel in the region. While some Asian currencies have weakened significantly in recent months, Mr. Wojick said he is "not seeing a whole lot of impact from our customers on that level."
Source: http://online.wsj.com
Boeing struggles with 787 production bottlenecks
(Reuters) - A 787 that rolled out of Boeing's factory in Everett, Washington, in January was hailed as an important milestone: the first Dreamliner built at a rate of 10 a month, the fastest for a twin-aisle jet.
But some employees who work on the aircraft are calling into question Boeing Co's ability to sustain that pace. They say the two factories that assemble the 787 are struggling to cope with a ramp-up in production that started late last year, and a huge backlog of unfinished work threatens to slow output.
Boeing's plant in North Charleston, South Carolina, cannot finish thousands of work orders and is sending pieces to the larger plant in Everett to be completed so that the company can maintain its 10-a-month rate, according to four employees who spoke on condition of anonymity. A work order can be as simple as attaching a part or as complex as installing a duct system.
A senior employee in Everett said the problem is particularly acute with the jet's complex wiring: fuselage sections were arriving from North Charleston with large bundles of wires that were not connected properly.
The South Carolina workers have the skills to produce the plane correctly "but there are not enough of them to match the rate increase," the senior employee said. "They can't keep up."
Boeing said it is aware of the bottlenecks and is working to fix the problems. The company has hired hundreds of contract workers in South Carolina, and created special teams in Everett to inspect the planes and tackle the extra tasks, known as "traveled work" because it was moved from South Carolina to Everett.
"While we try to minimize it, traveled work is something we deal with in all production programs," said Boeing spokesman Marc Birtel. "The 787 program remains on track to meet its delivery commitments in 2014 and we are producing 787s at a rate of 10 per month as planned."
The backlog, first reported in the Seattle Times, comes as the U.S. Federal Aviation Administration has launched an audit of Boeing's factories this month. The FAA said the audit was regularly scheduled and declined to comment further.
Boeing said the audit was routine, performed about every two years at multiple facilities, and required for Boeing to maintain its FAA certification to produce all of its airplanes. It was not focused on the South Carolina plant, Boeing said.
MAINTAINING OUTPUT
Boeing's ability to churn out the Dreamliner is crucial to its financial performance this year as the company is relying on commercial jetliners to offset a weak defense business. While Boeing still loses money on each 787 that it builds, it gets closer to breaking even as production increases.
Cash flow from the 787 is expected to improve next year, provided the factories stay on pace, Boeing said. The cash is needed to fund new plane development, as well as fulfill investors' desire for share buybacks and dividends.
Boeing's South Carolina facility makes all aft and midbody fuselage sections for the 787. Most of those sections are shipped to Everett for final assembly of the airplane, with the remainder assembled into finished planes in South Carolina.
Boeing said South Carolina aims to build three finished jets a month by mid-year, with Everett producing seven.
A Boeing employee in South Carolina said factory managers are telling workers to put down their tools and let pieces move along the assembly line even if they are not finished, so that the plant can maintain its output rate.
Boeing's spokesman confirmed it is sometimes more efficient if unfinished work is moved elsewhere so the line can keep operating at the planned pace.
The production problems with the wiring bundles have caught the attention of the FAA, whose inspectors issued Boeing at least one "letter of investigation" on the matter months ago, according to the senior Everett employee.
The letter was part of ongoing FAA oversight and has not been linked to the current audit or to any issues on the delivered planes, including the 787 battery fires that grounded the entire fleet for more than three months last year.
According to Boeing, it has addressed the wiring issues raised by the letters. The company has teams to inspect all wiring, both from suppliers and its own facilities, as is standard practice.
The Everett worker said wiring is now no longer being fully installed in South Carolina. Instead, wiring bundles are being "pre-routed," or put in loosely, and the actual connections are done in Everett.
The employees who discussed the 787 problems all asked not to be identified because they were not authorized to speak publicly and feared losing their jobs.
BOEING TAKING ACTION
One contractor recently hired in South Carolina said his job consists of working "shoulder to shoulder" with assembly workers to review engineering plans, inspect components before they are installed, oversee installation and review the final work to make sure it was done properly. Other contractors perform assembly or fabrication work.
He said 9,500 work orders were backlogged late last month. The Boeing staff worker in South Carolina said the backlog has since fallen to about 7,500
Boeing disputed those figures, but declined to give other numbers. It said about 7,000 contract and staff employees currently work at the South Carolina facility.
The contractors are being paid overtime on mandatory work Saturdays, the contract worker said. Sunday work is voluntary but there is pressure to volunteer, the worker said.
Boeing Chief Executive Jim McNerney told an industry conference last week that bottlenecks in the South Carolina factory appeared as Boeing added a stretched version of the 787-8, known as the 787-9, while increasing the production rate.
There was "not any sign that the 787 program is off the rails or we may not be able to hold 10 a month," McNerney told the conference organized by Cowen & Co.
"This is what happens on all of our programs," he said. "Sometimes when we break to a rate, it surfaces an issue that needs some extra attention. And that's really the story here."
Source: http://www.reuters.com
But some employees who work on the aircraft are calling into question Boeing Co's ability to sustain that pace. They say the two factories that assemble the 787 are struggling to cope with a ramp-up in production that started late last year, and a huge backlog of unfinished work threatens to slow output.
Boeing's plant in North Charleston, South Carolina, cannot finish thousands of work orders and is sending pieces to the larger plant in Everett to be completed so that the company can maintain its 10-a-month rate, according to four employees who spoke on condition of anonymity. A work order can be as simple as attaching a part or as complex as installing a duct system.
A senior employee in Everett said the problem is particularly acute with the jet's complex wiring: fuselage sections were arriving from North Charleston with large bundles of wires that were not connected properly.
The South Carolina workers have the skills to produce the plane correctly "but there are not enough of them to match the rate increase," the senior employee said. "They can't keep up."
Boeing said it is aware of the bottlenecks and is working to fix the problems. The company has hired hundreds of contract workers in South Carolina, and created special teams in Everett to inspect the planes and tackle the extra tasks, known as "traveled work" because it was moved from South Carolina to Everett.
"While we try to minimize it, traveled work is something we deal with in all production programs," said Boeing spokesman Marc Birtel. "The 787 program remains on track to meet its delivery commitments in 2014 and we are producing 787s at a rate of 10 per month as planned."
The backlog, first reported in the Seattle Times, comes as the U.S. Federal Aviation Administration has launched an audit of Boeing's factories this month. The FAA said the audit was regularly scheduled and declined to comment further.
Boeing said the audit was routine, performed about every two years at multiple facilities, and required for Boeing to maintain its FAA certification to produce all of its airplanes. It was not focused on the South Carolina plant, Boeing said.
MAINTAINING OUTPUT
Boeing's ability to churn out the Dreamliner is crucial to its financial performance this year as the company is relying on commercial jetliners to offset a weak defense business. While Boeing still loses money on each 787 that it builds, it gets closer to breaking even as production increases.
Cash flow from the 787 is expected to improve next year, provided the factories stay on pace, Boeing said. The cash is needed to fund new plane development, as well as fulfill investors' desire for share buybacks and dividends.
Boeing's South Carolina facility makes all aft and midbody fuselage sections for the 787. Most of those sections are shipped to Everett for final assembly of the airplane, with the remainder assembled into finished planes in South Carolina.
Boeing said South Carolina aims to build three finished jets a month by mid-year, with Everett producing seven.
A Boeing employee in South Carolina said factory managers are telling workers to put down their tools and let pieces move along the assembly line even if they are not finished, so that the plant can maintain its output rate.
Boeing's spokesman confirmed it is sometimes more efficient if unfinished work is moved elsewhere so the line can keep operating at the planned pace.
The production problems with the wiring bundles have caught the attention of the FAA, whose inspectors issued Boeing at least one "letter of investigation" on the matter months ago, according to the senior Everett employee.
The letter was part of ongoing FAA oversight and has not been linked to the current audit or to any issues on the delivered planes, including the 787 battery fires that grounded the entire fleet for more than three months last year.
According to Boeing, it has addressed the wiring issues raised by the letters. The company has teams to inspect all wiring, both from suppliers and its own facilities, as is standard practice.
The Everett worker said wiring is now no longer being fully installed in South Carolina. Instead, wiring bundles are being "pre-routed," or put in loosely, and the actual connections are done in Everett.
The employees who discussed the 787 problems all asked not to be identified because they were not authorized to speak publicly and feared losing their jobs.
BOEING TAKING ACTION
One contractor recently hired in South Carolina said his job consists of working "shoulder to shoulder" with assembly workers to review engineering plans, inspect components before they are installed, oversee installation and review the final work to make sure it was done properly. Other contractors perform assembly or fabrication work.
He said 9,500 work orders were backlogged late last month. The Boeing staff worker in South Carolina said the backlog has since fallen to about 7,500
Boeing disputed those figures, but declined to give other numbers. It said about 7,000 contract and staff employees currently work at the South Carolina facility.
The contractors are being paid overtime on mandatory work Saturdays, the contract worker said. Sunday work is voluntary but there is pressure to volunteer, the worker said.
Boeing Chief Executive Jim McNerney told an industry conference last week that bottlenecks in the South Carolina factory appeared as Boeing added a stretched version of the 787-8, known as the 787-9, while increasing the production rate.
There was "not any sign that the 787 program is off the rails or we may not be able to hold 10 a month," McNerney told the conference organized by Cowen & Co.
"This is what happens on all of our programs," he said. "Sometimes when we break to a rate, it surfaces an issue that needs some extra attention. And that's really the story here."
Source: http://www.reuters.com
Wednesday, January 29, 2014
Boeing Profit Improves on Higher Deliveries: Aerospace Giant Offers Tepid Outlook for 2014
The Wall Street Journal
By Jon Ostrower
Updated Jan. 29, 2014 10:11 a.m. ET
Boeing Co. easily beat forecasted earnings growth in the fourth quarter on continued strong demand for its jetliners, but tempered its outlook for 2014, despite another planned record year for commercial aircraft production.
The aerospace and defense giant delivered a record 648 commercial aircraft in 2013 and expects to best that in 2014, planning for 715 to 725 deliveries, driven by increasing production of single-aisle 737s and long-range 787 Dreamliners.
But Boeing's guidance for 2014 was lighter than analysts' expectations, and while its commercial backlog reached a record $374 billion for 5,080 jets at the end of 2013, year-end defense orders were down to $70 billion from $71 billion a year earlier, with a dip expected in profit margins in 2014.
Boeing's forecast for earnings per share of $7 to $7.20 in 2014 also missed analysts' expectations, according to those polled by Thomson Reuters, who expected per-share profit of $7.57. Revenue is forecast to climb again from the record $86.6 billion in 2013—to $87.5 billion to $90.5 billion in 2014—but that too missed expectations of $92.72 billion.
Analysts cautioned Boeing's initial forecasts tend to be more conservative at the beginning of the year.
Revenue at its commercial division edged up 3.7%, while operating earnings rose 19% in the quarter, having delivered 172 jets.
"Our commercial airplanes business accelerated delivery of its record backlog by successfully increasing production rates while also achieving important development milestones on the 737 MAX and 787-9 and launching the new 787-10 and 777X models with an unprecedented customer response," Chairman and Chief Executive Jim McNerney said.
Boeing's defense, space and security division also turned stronger results despite tight defense budgets. Revenue improved 6.1%, and operating earnings rose 27%. Mr. McNerney said the unit continues to persist through "a tough operating environment."
Overall, Boeing reported a quarterly profit of $1.23 billion, or $1.61 a share, up from $978 million, or $1.28 a share, a year earlier on increasing jetliner deliveries driving revenue up 7% to $23.8 billion. Analysts polled by Thomson Reuters expected per-share profit of $1.57 and revenue of $22.74 billion.
—Tess Stynes and Doug Cameron contributed to this article.
Source: http://online.wsj.com
By Jon Ostrower
Updated Jan. 29, 2014 10:11 a.m. ET
Boeing Co. easily beat forecasted earnings growth in the fourth quarter on continued strong demand for its jetliners, but tempered its outlook for 2014, despite another planned record year for commercial aircraft production.
The aerospace and defense giant delivered a record 648 commercial aircraft in 2013 and expects to best that in 2014, planning for 715 to 725 deliveries, driven by increasing production of single-aisle 737s and long-range 787 Dreamliners.
But Boeing's guidance for 2014 was lighter than analysts' expectations, and while its commercial backlog reached a record $374 billion for 5,080 jets at the end of 2013, year-end defense orders were down to $70 billion from $71 billion a year earlier, with a dip expected in profit margins in 2014.
Boeing's forecast for earnings per share of $7 to $7.20 in 2014 also missed analysts' expectations, according to those polled by Thomson Reuters, who expected per-share profit of $7.57. Revenue is forecast to climb again from the record $86.6 billion in 2013—to $87.5 billion to $90.5 billion in 2014—but that too missed expectations of $92.72 billion.
Analysts cautioned Boeing's initial forecasts tend to be more conservative at the beginning of the year.
Revenue at its commercial division edged up 3.7%, while operating earnings rose 19% in the quarter, having delivered 172 jets.
"Our commercial airplanes business accelerated delivery of its record backlog by successfully increasing production rates while also achieving important development milestones on the 737 MAX and 787-9 and launching the new 787-10 and 777X models with an unprecedented customer response," Chairman and Chief Executive Jim McNerney said.
Boeing's defense, space and security division also turned stronger results despite tight defense budgets. Revenue improved 6.1%, and operating earnings rose 27%. Mr. McNerney said the unit continues to persist through "a tough operating environment."
Overall, Boeing reported a quarterly profit of $1.23 billion, or $1.61 a share, up from $978 million, or $1.28 a share, a year earlier on increasing jetliner deliveries driving revenue up 7% to $23.8 billion. Analysts polled by Thomson Reuters expected per-share profit of $1.57 and revenue of $22.74 billion.
—Tess Stynes and Doug Cameron contributed to this article.
Source: http://online.wsj.com
Wednesday, January 22, 2014
Boeing Adding Workers to Address Dreamliner Production Problems: WSJ
The Wall Street Journal
By Jon Ostrower
Updated Jan. 22, 2014 6:40 p.m. ET
Boeing Co. is adding hundreds of contract workers at its South Carolina plant to help deal with production problems as it builds its flagship 787 Dreamliner jets.
The aerospace giant is hiring more than 300 contract mechanics and inspectors immediately at the factory in North Charleston, S.C., and could increase that number to between 500 and 1,000, according to three people familiar with the hiring. Those workers would assist the more than 7,000 people Boeing employed in South Carolina as of the end of last year, a figure that includes existing contract workers but predominantly Boeing staff employees.
The move is a reversal by Boeing, which early last year let go of hundreds of contract workers in an effort to reduce costs at North Charleston. Contract workers are generally paid more than staff employees, not including benefits. It reflects the company's continued struggle to ramp up production of the advanced, widebody jetliner while also reducing costs.
The North Charleston plant does final assembly of some Dreamliners and produces mid and rear sections of the plane's carbon-fiber composite fuselage for all of the jets, including those made in Washington state. Last year North Charleston assembled 14 of the 65 total Dreamliners delivered. Boeing aims to increase that to a third of the 120 Dreamliners it plans to build and deliver in 2014.
Four people familiar with the situation said that, as North Charleston workers have doubled production over the past year, the mid-body sections of the jet—which are 84 to 104 feet long—are being shipped to final assembly lines with more final tasks that still need completion. One of those people, a production staffer in North Charleston, said that incomplete work on mid-body sections now exceeds the level in July 2011, when the plant suspended shipments for a month to catch up.
A Boeing spokesman confirmed a "surge" in hiring of contractors in North Charleston, but declined to share details. The spokesman said they are needed to "stabilize" its production of the Dreamliner mid-body sections while it introduces a new, longer version of the Dreamliner dubbed the 787-9, which seats more passengers.
Boeing said it has no plans to slow production or pause shipments from North Charleston to its final assembly lines, at a rate of ten a month. "While we have some challenges to address, we see no risk to the program's ability to meet its commitments," it said.
To enable high rates of production, Boeing designed the Dreamliner's supply chain to install parts like the passenger doors, hydraulics, electronics and plumbing earlier so that the final assembly process could be faster. That makes the production of the body sections like those made in North Charleston more complicated.
Boeing started production in 2011 at the nonunion North Charleston plant to supplement its unionized final assembly factories in Washington. The site's nonunion status permits the company to add contractors as needed "to address these work surge requirements as they arise," Boeing said. The company said it also is shifting some staff from its other sites elsewhere in the country to assist in North Charleston.
Boeing last February disclosed it was cutting hundreds of the more than 6,700 workers it then had at the North Charleston plant, with the cuts mostly among contract laborers, many of whom had been part of the operation there for years. Boeing has since added hundreds more staff employees there.
Many experienced workers have been diverted from the two smaller facilities on the North Charleston campus that produce the mid and aft-body of the Dreamliner to speed up deliveries of the assembled 787, said two of the people familiar with production. Many of the incomplete tasks on the mid-body of the Dreamliner are slowing final assembly and delivery of the jets there, they added.
The remaining staff working on the mid- and aft-body have been stretched thin with increased overtime and the increasing rate.
Boeing has struggled to quickly attract experienced contractors to assist, said a person familiar with the hiring. According to public job listings for contract positions, staffers are being offered an hourly rate of $23 for assembly mechanics and inspectors. That is higher than what staff employees typically make, but well below the $28 to $45 an hour offered for the same positions in 2009, said a former contractor at the site who was approached by a recruiter to reapply for his old job after his contract was canceled as part of last year's cuts.
Boeing has staked much of its commercial future on the 787 and Wall Street is closely watching the company's initiatives to both keep pace with demand for the jets and its cost-cutting plan to meet its profitability targets.
Boeing next week is expected to report record earnings for its commercial unit, in part based on its accounting for the 787, which allows it to spread its early high costs over 1,300 deliveries and book future profits today.
Source: http://online.wsj.com
By Jon Ostrower
Updated Jan. 22, 2014 6:40 p.m. ET
Boeing Co. is adding hundreds of contract workers at its South Carolina plant to help deal with production problems as it builds its flagship 787 Dreamliner jets.
The aerospace giant is hiring more than 300 contract mechanics and inspectors immediately at the factory in North Charleston, S.C., and could increase that number to between 500 and 1,000, according to three people familiar with the hiring. Those workers would assist the more than 7,000 people Boeing employed in South Carolina as of the end of last year, a figure that includes existing contract workers but predominantly Boeing staff employees.
The move is a reversal by Boeing, which early last year let go of hundreds of contract workers in an effort to reduce costs at North Charleston. Contract workers are generally paid more than staff employees, not including benefits. It reflects the company's continued struggle to ramp up production of the advanced, widebody jetliner while also reducing costs.
The North Charleston plant does final assembly of some Dreamliners and produces mid and rear sections of the plane's carbon-fiber composite fuselage for all of the jets, including those made in Washington state. Last year North Charleston assembled 14 of the 65 total Dreamliners delivered. Boeing aims to increase that to a third of the 120 Dreamliners it plans to build and deliver in 2014.
Four people familiar with the situation said that, as North Charleston workers have doubled production over the past year, the mid-body sections of the jet—which are 84 to 104 feet long—are being shipped to final assembly lines with more final tasks that still need completion. One of those people, a production staffer in North Charleston, said that incomplete work on mid-body sections now exceeds the level in July 2011, when the plant suspended shipments for a month to catch up.
A Boeing spokesman confirmed a "surge" in hiring of contractors in North Charleston, but declined to share details. The spokesman said they are needed to "stabilize" its production of the Dreamliner mid-body sections while it introduces a new, longer version of the Dreamliner dubbed the 787-9, which seats more passengers.
Boeing said it has no plans to slow production or pause shipments from North Charleston to its final assembly lines, at a rate of ten a month. "While we have some challenges to address, we see no risk to the program's ability to meet its commitments," it said.
To enable high rates of production, Boeing designed the Dreamliner's supply chain to install parts like the passenger doors, hydraulics, electronics and plumbing earlier so that the final assembly process could be faster. That makes the production of the body sections like those made in North Charleston more complicated.
Boeing started production in 2011 at the nonunion North Charleston plant to supplement its unionized final assembly factories in Washington. The site's nonunion status permits the company to add contractors as needed "to address these work surge requirements as they arise," Boeing said. The company said it also is shifting some staff from its other sites elsewhere in the country to assist in North Charleston.
Boeing last February disclosed it was cutting hundreds of the more than 6,700 workers it then had at the North Charleston plant, with the cuts mostly among contract laborers, many of whom had been part of the operation there for years. Boeing has since added hundreds more staff employees there.
Many experienced workers have been diverted from the two smaller facilities on the North Charleston campus that produce the mid and aft-body of the Dreamliner to speed up deliveries of the assembled 787, said two of the people familiar with production. Many of the incomplete tasks on the mid-body of the Dreamliner are slowing final assembly and delivery of the jets there, they added.
The remaining staff working on the mid- and aft-body have been stretched thin with increased overtime and the increasing rate.
Boeing has struggled to quickly attract experienced contractors to assist, said a person familiar with the hiring. According to public job listings for contract positions, staffers are being offered an hourly rate of $23 for assembly mechanics and inspectors. That is higher than what staff employees typically make, but well below the $28 to $45 an hour offered for the same positions in 2009, said a former contractor at the site who was approached by a recruiter to reapply for his old job after his contract was canceled as part of last year's cuts.
Boeing has staked much of its commercial future on the 787 and Wall Street is closely watching the company's initiatives to both keep pace with demand for the jets and its cost-cutting plan to meet its profitability targets.
Boeing next week is expected to report record earnings for its commercial unit, in part based on its accounting for the 787, which allows it to spread its early high costs over 1,300 deliveries and book future profits today.
Source: http://online.wsj.com
Congress throws Boeing a lifeline for Super Hornet
WASHINGTON • Congress has given Boeing's Super Hornet fighter jet a lifeline, at least for now.
The omnibus federal spending measure contains a down payment of $75 million for 22 of the fighters that the Navy didn't request.
The funding, signed into law on Jan. 17, will prod Navy officials to decide this year whether to spend as much as $2 billion for the unplanned planes as a hedge against delays of the F-35 Joint Strike Fighter.
At stake is Boeing's staying power as a producer of fighter jets alongside Bethesda, Md.-based Lockheed Martin Corp., which builds the F-35 for the Navy, Marine Corps and Air Force. Any additional orders from the Navy could serve as a buffer as Boeing works to attract new customers in Europe, the Middle East and Canada.
"With some of the bumps in the road with the Joint Strike Fighter this is a very important line to keep open," Rep. Rodney Frelinghuysen, R-N.J. and chairman of the House Appropriations Defense subcommittee, said in an interview.
The additional $75 million is "a great sign from Congress that they understand the importance of the line," Mike Gibbons, Boeing's vice president for the program, said in a telephone interview. He said the Super Hornet is "very important" for continued competition and industrial base expertise.
The money could give Chicago-based Boeing a fighting chance to keep its St. Louis, Mo.-based production line open beyond 2016. The plant is where the F-18 E/F Super Hornets and an electronics-jamming version of the aircraft called the E/A-18 Growler are built.
Missouri's senators, Claire McCaskill and Roy Blunt, make the case for the Super Hornet on lower cost, more options for the Navy's fleet of tactical aircraft and employment in their state.
"What's really important is, if you look at the squeezing of the budget, that we have a blend since it's half the price" of the F-35, McCaskill, a Democrat, said in an interview.
Blunt, a Republican, warned against fighter shortfalls on Navy carriers if the Pentagon doesn't order more planes.
He wrote in an Oct. 31, 2013 editorial in the St. Louis Post-Dispatch that the shortfall would leave "many American aircraft carriers without combat aircraft - like a bow without arrows."
The Super Hornet program supports about 90,000 direct and indirect jobs and has 1,900 suppliers across the U.S., according to Boeing. The company estimates the program contributes about $6 billion to the U.S. economy. Suppliers include Northrop Grumman, which makes the aft and center fuselage; General Electric, which produces the engines; and Raytheon, which supplies the radar.
The Navy's decision to buy more Boeing aircraft depends on the wear and tear of its older fighter jets, and whether it projects an unmanageable shortfall of tactical aircraft on its aircraft carriers a decade from now. As a result of the Navy scaling back flight hours in 2012 and 2013, its most up-to-date analysis shows a shortfall of fewer than 30 aircraft.
Boeing builds two Super Hornet versions - the single-seat E model and the two-seat F model. F-18s have been in service with the Navy since November 1999. The Navy's first operational squadron of Super Hornets was formed in 2001.
The Navy plans to retire older versions of the F/A-18 and shift to a combination of Super Hornets and carrier-based F-35s. The Marines envision a strike-fighter fleet solely comprising its F-35 version — designed for short takeoffs and vertical landings — and carrier-based jets once it can no longer extend the life of its Hornets and Harrier aircraft.
Boeing plans to scale back production from four aircraft to three aircraft a month, which would take production through the end of 2016, Gibbons said. Under current plans, Boeing will have delivered 135 Growlers and 563 Super Hornets to the Navy by the end of 2016. Australia also plans to buy 12 Growlers. Boeing has delivered 24 Super Hornets to that country.
Keeping the production line open by trickling domestic orders may become even more important for Boeing after it lost a $4.5 billion Brazilian fighter jet competition to Sweden's Saab AB in December. Boeing now is looking at potential new fighter contracts in Denmark, Canada and Kuwait. Other countries also could buy Super Hornets as they plan to replace their Lockheed F-16 aircraft with newer jets, Gibbons said.
Story and comments/reaction: http://www.stltoday.com
The omnibus federal spending measure contains a down payment of $75 million for 22 of the fighters that the Navy didn't request.
The funding, signed into law on Jan. 17, will prod Navy officials to decide this year whether to spend as much as $2 billion for the unplanned planes as a hedge against delays of the F-35 Joint Strike Fighter.
At stake is Boeing's staying power as a producer of fighter jets alongside Bethesda, Md.-based Lockheed Martin Corp., which builds the F-35 for the Navy, Marine Corps and Air Force. Any additional orders from the Navy could serve as a buffer as Boeing works to attract new customers in Europe, the Middle East and Canada.
"With some of the bumps in the road with the Joint Strike Fighter this is a very important line to keep open," Rep. Rodney Frelinghuysen, R-N.J. and chairman of the House Appropriations Defense subcommittee, said in an interview.
The additional $75 million is "a great sign from Congress that they understand the importance of the line," Mike Gibbons, Boeing's vice president for the program, said in a telephone interview. He said the Super Hornet is "very important" for continued competition and industrial base expertise.
The money could give Chicago-based Boeing a fighting chance to keep its St. Louis, Mo.-based production line open beyond 2016. The plant is where the F-18 E/F Super Hornets and an electronics-jamming version of the aircraft called the E/A-18 Growler are built.
Missouri's senators, Claire McCaskill and Roy Blunt, make the case for the Super Hornet on lower cost, more options for the Navy's fleet of tactical aircraft and employment in their state.
"What's really important is, if you look at the squeezing of the budget, that we have a blend since it's half the price" of the F-35, McCaskill, a Democrat, said in an interview.
Blunt, a Republican, warned against fighter shortfalls on Navy carriers if the Pentagon doesn't order more planes.
He wrote in an Oct. 31, 2013 editorial in the St. Louis Post-Dispatch that the shortfall would leave "many American aircraft carriers without combat aircraft - like a bow without arrows."
The Super Hornet program supports about 90,000 direct and indirect jobs and has 1,900 suppliers across the U.S., according to Boeing. The company estimates the program contributes about $6 billion to the U.S. economy. Suppliers include Northrop Grumman, which makes the aft and center fuselage; General Electric, which produces the engines; and Raytheon, which supplies the radar.
The Navy's decision to buy more Boeing aircraft depends on the wear and tear of its older fighter jets, and whether it projects an unmanageable shortfall of tactical aircraft on its aircraft carriers a decade from now. As a result of the Navy scaling back flight hours in 2012 and 2013, its most up-to-date analysis shows a shortfall of fewer than 30 aircraft.
Boeing builds two Super Hornet versions - the single-seat E model and the two-seat F model. F-18s have been in service with the Navy since November 1999. The Navy's first operational squadron of Super Hornets was formed in 2001.
The Navy plans to retire older versions of the F/A-18 and shift to a combination of Super Hornets and carrier-based F-35s. The Marines envision a strike-fighter fleet solely comprising its F-35 version — designed for short takeoffs and vertical landings — and carrier-based jets once it can no longer extend the life of its Hornets and Harrier aircraft.
Boeing plans to scale back production from four aircraft to three aircraft a month, which would take production through the end of 2016, Gibbons said. Under current plans, Boeing will have delivered 135 Growlers and 563 Super Hornets to the Navy by the end of 2016. Australia also plans to buy 12 Growlers. Boeing has delivered 24 Super Hornets to that country.
Keeping the production line open by trickling domestic orders may become even more important for Boeing after it lost a $4.5 billion Brazilian fighter jet competition to Sweden's Saab AB in December. Boeing now is looking at potential new fighter contracts in Denmark, Canada and Kuwait. Other countries also could buy Super Hornets as they plan to replace their Lockheed F-16 aircraft with newer jets, Gibbons said.
Story and comments/reaction: http://www.stltoday.com
Monday, January 13, 2014
Airbus Posts Record Jet Orders, Deliveries in 2013: WSJ
Airbus Tops Boeing's Annual Order Intake
The Wall Street Journal
By Marietta Cauchi
Jan. 13, 2014 5:05 a.m. ET
TOULOUSE, France— Airbus, the commercial arm of aerospace and defense company Airbus Group NV, Monday said it landed orders for 1,619 planes in 2013, setting a new industry record and topping U.S. rival Boeing Co.'s annual order intake.
The commercial jet maker broke another industry-wide record ending the year with an unfilled backlog of 5,559 aircraft, valued at $809 billion at list prices, or eight years production.
Toulouse-based Airbus said it delivered 626 commercial jets in 2013, a company record, beating its previous record of 588 planes last year.
The tally was dominated by smaller models including 493 of its single-aisle A320 family. It delivered 180 of its A330 intermediate jets and 25 A380s, the world's largest passenger plane.
Airbus expects to deliver its first A350, which competes with Boeing's 787 Dreamliner, in the fourth quarter of this year. "We expect to produce around 10 a month by the end of 2018 and break-even on the program by the end of the decade," said Airbus President and CEO Fabrice Brégier at the jet-maker's annual news conference.
There have been suggestions that Airbus will replace the A350-800 by putting a more powerful engine in its intermediate A330 model. Company executives said that they were considering all options and that most customers were converting to A350-900s or were willing to wait until production of the A350-800 became less constrained.
"This is not a priority—we are considering all ideas including whether there will be an A350-900 reduced in size," said Mr. Brégier. "The A350-800 with improvements will remain very competitive," he said.
Airbus said it would also start producing the A320neo from the fourth quarter and that it has enough orders for a monthly production rate of 42 between 2015 and 2018.
"We have now secured transition [from the A320neo] at a rate of 42 neos a month and if the market remains steady there is an opportunity to go higher before 2018 but that's an 'if' and no decision has been made," Mr. Brégier said.
Mr. Brégier said that the supply chain had improved a lot last year justifying a "gentle ramp-up" over the next couple of years "if we plan properly and there are no problems in series programs."
Airbus reiterated earlier guidance that it would break even on the A380 superjumbo by 2015 based on 30 annual deliveries.
John Leahy, Airbus global sales chief, said that he expected to finalize a firm order for A380s from Doric Lease Corp. during the first quarter following a memorandum of understanding signed at the Paris Air Show in June.
Last week Boeing reported gross orders of 1,531 new commercial jets for last year and, subtracting canceled orders, Boeing added 1,355 net orders. This compares with Airbus' 1,503 net orders.
The U.S. manufacturer delivered 648 jets during 2013, making it the world's largest jet maker for the second year running.
Source: http://online.wsj.com
The Wall Street Journal
By Marietta Cauchi
Jan. 13, 2014 5:05 a.m. ET
TOULOUSE, France— Airbus, the commercial arm of aerospace and defense company Airbus Group NV, Monday said it landed orders for 1,619 planes in 2013, setting a new industry record and topping U.S. rival Boeing Co.'s annual order intake.
The commercial jet maker broke another industry-wide record ending the year with an unfilled backlog of 5,559 aircraft, valued at $809 billion at list prices, or eight years production.
Toulouse-based Airbus said it delivered 626 commercial jets in 2013, a company record, beating its previous record of 588 planes last year.
The tally was dominated by smaller models including 493 of its single-aisle A320 family. It delivered 180 of its A330 intermediate jets and 25 A380s, the world's largest passenger plane.
Airbus expects to deliver its first A350, which competes with Boeing's 787 Dreamliner, in the fourth quarter of this year. "We expect to produce around 10 a month by the end of 2018 and break-even on the program by the end of the decade," said Airbus President and CEO Fabrice Brégier at the jet-maker's annual news conference.
There have been suggestions that Airbus will replace the A350-800 by putting a more powerful engine in its intermediate A330 model. Company executives said that they were considering all options and that most customers were converting to A350-900s or were willing to wait until production of the A350-800 became less constrained.
"This is not a priority—we are considering all ideas including whether there will be an A350-900 reduced in size," said Mr. Brégier. "The A350-800 with improvements will remain very competitive," he said.
Airbus said it would also start producing the A320neo from the fourth quarter and that it has enough orders for a monthly production rate of 42 between 2015 and 2018.
"We have now secured transition [from the A320neo] at a rate of 42 neos a month and if the market remains steady there is an opportunity to go higher before 2018 but that's an 'if' and no decision has been made," Mr. Brégier said.
Mr. Brégier said that the supply chain had improved a lot last year justifying a "gentle ramp-up" over the next couple of years "if we plan properly and there are no problems in series programs."
Airbus reiterated earlier guidance that it would break even on the A380 superjumbo by 2015 based on 30 annual deliveries.
John Leahy, Airbus global sales chief, said that he expected to finalize a firm order for A380s from Doric Lease Corp. during the first quarter following a memorandum of understanding signed at the Paris Air Show in June.
Last week Boeing reported gross orders of 1,531 new commercial jets for last year and, subtracting canceled orders, Boeing added 1,355 net orders. This compares with Airbus' 1,503 net orders.
The U.S. manufacturer delivered 648 jets during 2013, making it the world's largest jet maker for the second year running.
Source: http://online.wsj.com
An Airbus A380
Bloomberg News
Sunday, January 12, 2014
Air India year-old Dreamliners aging prematurely?
NEW DELHI: Is Boeing's brand new B-787 Dreamliner showing signs of "premature aging"? On Saturday, an Air India Dreamliner had to be grounded in Hong Kong after the actuator of its wing spoilers broke. A spoiler acts as a speed breaker on an aircraft and its actuators make it go up or down on wing tips during takeoff to alter drag and during landing to increase rate of descent. Without this important device perfectly functional, an airplane simply can't be allowed to get airborne.
An AI spokesman confirmed the latest B-787 trouble. "The aircraft was grounded and has since been rectified. It will be operational soon from Hong Kong. Boeing has informed us that that they will not just replace but modify this part (spoiler-actuator for all Dreamliners)," he said.
Boeing's decision to modify a particularly snag-prone part comes as the brand new or less than a year-old B-787s are showing signs that only aircraft that have been in service for five to seven years show. Spoiler actuators of a brand new plane breaking are unheard off, said a source. In fact, pilots say that this particular snag has become a regular feature for the Dreamliner.
Another senior AI official recalled that a few weeks back, a B-787 landed in Delhi and the crew left the cockpit after a near perfect flight. When engineers came to check this aircraft for the next flight, they discovered that the cockpit windshield had cracked. "The plane was just parked there and the windshield cracked just like that! On its own! We have never seen or heard anything like that," said the official. AI's mint fresh Dreamliners have seen two windshield cracks so far.
These signs of "premature aging" have now led airlines using the Dreamliner, like AI, if Boeing has had serious quality issues with the plane. "The plane was delayed by years and Boeing was required to pay penalty to airlines for that. They have hurried up and outsourced a lot of jobs to China for cost control. The effect on quality is showing," said a pilot.
Aviation minister Ajit Singh had last month said that AI's Dreamliner fleet had suffered 136 'minor' technical problems between their delivery since September, 2012, and November, 2013.
However, both Boeing and airlines say the issues with the B-787 have no bearing on safety. "The aircraft is perfectly safe. Constant snags on it mean that no one knows when a Dreamliner will be grounded and that has put a question mark on ontime performance and led to delays and cancellations that rightly irk passengers. We were banking on it majorly to improve our punctuality record which some other airlines have made their USP," said an official.
Story and Comments/Reaction: http://timesofindia.indiatimes.com
An AI spokesman confirmed the latest B-787 trouble. "The aircraft was grounded and has since been rectified. It will be operational soon from Hong Kong. Boeing has informed us that that they will not just replace but modify this part (spoiler-actuator for all Dreamliners)," he said.
Boeing's decision to modify a particularly snag-prone part comes as the brand new or less than a year-old B-787s are showing signs that only aircraft that have been in service for five to seven years show. Spoiler actuators of a brand new plane breaking are unheard off, said a source. In fact, pilots say that this particular snag has become a regular feature for the Dreamliner.
Another senior AI official recalled that a few weeks back, a B-787 landed in Delhi and the crew left the cockpit after a near perfect flight. When engineers came to check this aircraft for the next flight, they discovered that the cockpit windshield had cracked. "The plane was just parked there and the windshield cracked just like that! On its own! We have never seen or heard anything like that," said the official. AI's mint fresh Dreamliners have seen two windshield cracks so far.
These signs of "premature aging" have now led airlines using the Dreamliner, like AI, if Boeing has had serious quality issues with the plane. "The plane was delayed by years and Boeing was required to pay penalty to airlines for that. They have hurried up and outsourced a lot of jobs to China for cost control. The effect on quality is showing," said a pilot.
Aviation minister Ajit Singh had last month said that AI's Dreamliner fleet had suffered 136 'minor' technical problems between their delivery since September, 2012, and November, 2013.
However, both Boeing and airlines say the issues with the B-787 have no bearing on safety. "The aircraft is perfectly safe. Constant snags on it mean that no one knows when a Dreamliner will be grounded and that has put a question mark on ontime performance and led to delays and cancellations that rightly irk passengers. We were banking on it majorly to improve our punctuality record which some other airlines have made their USP," said an official.
Story and Comments/Reaction: http://timesofindia.indiatimes.com
Thursday, January 09, 2014
Rolls-Royce, Wärtsilä End Merger Talks: U.K. Industrial Group Would Have Taken Over Finnish Engine Maker
The Wall Street Journal
By Matthew Curtin
Jan. 9, 2014 2:54 a.m. ET
LONDON— Rolls-Royce Holdings PLC and Wärtsilä Oyj said Thursday they are no longer in merger talks which would have seen one of the U.K.'s flagship industrial groups take over its smaller Finnish engine-making rival in a multibillion-dollar deal.
Rolls-Royce, which makes aircraft engines for Airbus Group and Boeing Co., said "preliminary discussions with the board of Wärtsilä regarding a possible offer for the company…are no longer continuing."
Helsinki-listed Wärtsilä confirmed in a separate statement that talks have ended after it had received a preliminary approach from the British company.
The companies said their statements follow press speculation about a possible deal.
The Finnish company, which has a market capitalization of around €6.7 billion ($9.1 billion), derives most of its €4.7 billion in annual revenue from making power-generation equipment for liquid-fuel and gas power plants as well as making engines for ships. It also has a services business.
Rolls-Royce, best-known for making engines for commercial aircraft, is also a big producer of power equipment and increasingly focused on the marine industry.
Rolls-Royce in partnership with Daimler AG of Germany is the process of the completion of the takeover of Germany engine maker Tognum AG. Wärtsilä recently acquired Hamworthy, a specialist U.K. maker of marine equipment.
Source: http://online.wsj.com
By Matthew Curtin
Jan. 9, 2014 2:54 a.m. ET
LONDON— Rolls-Royce Holdings PLC and Wärtsilä Oyj said Thursday they are no longer in merger talks which would have seen one of the U.K.'s flagship industrial groups take over its smaller Finnish engine-making rival in a multibillion-dollar deal.
Rolls-Royce, which makes aircraft engines for Airbus Group and Boeing Co., said "preliminary discussions with the board of Wärtsilä regarding a possible offer for the company…are no longer continuing."
Helsinki-listed Wärtsilä confirmed in a separate statement that talks have ended after it had received a preliminary approach from the British company.
The companies said their statements follow press speculation about a possible deal.
The Finnish company, which has a market capitalization of around €6.7 billion ($9.1 billion), derives most of its €4.7 billion in annual revenue from making power-generation equipment for liquid-fuel and gas power plants as well as making engines for ships. It also has a services business.
Rolls-Royce, best-known for making engines for commercial aircraft, is also a big producer of power equipment and increasingly focused on the marine industry.
Rolls-Royce in partnership with Daimler AG of Germany is the process of the completion of the takeover of Germany engine maker Tognum AG. Wärtsilä recently acquired Hamworthy, a specialist U.K. maker of marine equipment.
Source: http://online.wsj.com
Tuesday, January 07, 2014
Boeing's Key Mission: Cut Dreamliner Cost
The Wall Street Journal
By Jon Ostrower
Jan. 7, 2014 8:14 p.m. ET
Boeing Co. showed in 2013 that having burning batteries aboard its most-advanced aircraft wasn't necessarily bad for business.
Despite a series of embarrassments, including the temporary grounding of its flagship 787 Dreamliner after two battery incidents, Boeing's commercial-jet business had one of its best years ever.
This is expected to be another banner year for the company, but to succeed in the long run, Boeing will have to slash the cost of building the Dreamliner while meeting ambitious delivery schedules for six new commercial-jet models it plans to churn out in the next six years.
Boeing booked its fourth consecutive increase in net new aircraft orders last year. The aerospace giant also topped its previous record for jet deliveries, and is set to surpass rival Airbus Group NV for the second year in a row. Operating profit at Boeing's commercial-jet division soared 24% to $4.3 billion in the first nine months of 2013, and the full-year number likely exceeded the high of $4.7 billion set in 2012.
Boeing shares, meanwhile, are trading near an all-time high after rising more than 80% last year, making the stock the year's best performer in the Dow Jones Industrial Average.
The strong financial performance came even as Boeing was beset by the 3½-month grounding of the Dreamliner, an unrelated fire aboard one of the new planes and a spate of reliability issues that have frustrated the aircraft's customers. The gains partly stem from the airline industry's voracious demand for new fuel-efficient jets.
"At the end of the day airlines are focused on economics, and the economics [of the 787] look pretty good," said Richard Aboulafia, vice president of analysis for the Teal Group aerospace consulting firm.
For Boeing, the cost of producing the Dreamliner, which was delayed by 3½ years because of design and manufacturing problems, is a thorny issue. The Dreamliners delivered so far continue to cost the company much more to make than what it charges for them, a fact obscured by its soaring financial results.
In effect, Boeing's accounting method lets it book future profits now by spreading out the costs and revenue from the 1,300 Dreamliners it expects to deliver over roughly a decade. Boeing says it uses this "program accounting" because of the huge sums needed to develop new jetliners and to manufacture early versions of them, before production becomes more efficient.
If Boeing booked the difference between current sales and costs for each product it delivers, the way most companies do, its commercial-jet division's operating profit for the first nine months of 2013 would instead have been a $69 million loss, according to company figures.
Boeing's cumulative Dreamliner sales pushed past 1,000 in 2013, its first strongly positive sales year since 2008, helped by its launch in June of the new stretched version, dubbed the 787-10.
The company doesn't provide cost and sales data for specific planes, but its single-aisle 737 and long-range 777 generate millions of profit on each delivery, helping to offset the Dreamliner's cash drain.
"On a cash basis, [Boeing is] losing quite a bit of money on every [787] aircraft they ship," said Joseph Nadol, an analyst at J.P. Morgan Chase & Co. Mr. Nadol estimates that Boeing's unit costs for delivering each 787 exceeded the plane's estimated $115 million average selling price by $45 million in the third quarter, down from $73 million in the first quarter.
Mr. Nadol expects Boeing to continue outperforming the market. But, he adds, the question of whether it can reverse the loss per plane on its forecast schedule in the coming years remains the "elephant in the room."
Boeing classifies the gap between what it currently costs to build a Dreamliner and the program's average estimated costs as "deferred production costs."
It has made aggressive efforts to reduce the aircraft's costs by reorganizing its plants for greater efficiency and renegotiating contracts with suppliers and its labor unions. But it projects that deferred costs for the aircraft will rise to $25 billion before it breaks even on the Dreamliner's average costs and the program starts to dig itself out of the hole, likely around 2015.
The comparable hole for Boeing's last new twin-aisle jet, the 777, first delivered in 1995, was about $3.7 billion, adjusted for inflation, Boeing data show.
Chief Financial Officer Greg Smith said in October that Boeing no longer considered deferred production costs a useful indicator of the Dreamliner program's progress. But analysts say it remains the clearest measure of the 787's cash consumption.
Boeing says it plans to increase production, which is now 10 jets a month, to 12 a month in 2016 and 14 a month by the end of the decade. And, it said that as output accelerates, it will plug the $25 billion gap more quickly.
In October, Boeing increased its estimate of deferred-production from $20 billion, citing higher costs to introduce the 787-10 and changes in its factories to increase production. In December, the company detailed plans to add capacity at its factory and flight line in North Charleston, S.C. in 2014 and 2015, according to documents from the U.S. Army Corp of Engineers.
For the Dreamliner's customers, the payoff has been quicker. The jet's carbon-fiber fuselage, next-generation engines and advanced electronics were designed to lower airlines' costs.
The chief executive of LOT Polish Airlines, another Dreamliner customer, said last month that the 787's cost savings were central to the airline's restructuring efforts and attracted lucrative premium and business-class travelers, helping the carrier narrow a projected operating loss for fiscal 2013 to $6.6 million from $47 million. LOT also said it was compensated by Boeing for Dreamliner troubles, but didn't disclose the amount.
Dreamliners flown by United Continental Holdings Inc., the plane's sole U.S. operator, have been roughly 6% more cost-efficient per seat to operate in 2013 than the equivalent-sized Airbus A330s flown by several other U.S. airlines, according to an analysis by aviation consulting firm AirInsight of the carriers' filings with the Transportation Department. Such figures are often revised as airlines provide additional information.
A United spokeswoman said the 787 "offers vast improvements from previous generation aircraft" and helps hedge against fluctuating fuel prices. As the only aircraft of its size that can fly nonstop for more than 14 hours, it is opening new routes to Asia and Africa, she said.
Crawford Hamilton, a senior marketing executive at Airbus, said its A330 is 6% cheaper to operate in total than the Dreamliner when factoring in the A330's lower purchase and lease costs.
Though safety investigators in the U.S. and Japan have yet to pinpoint what caused the lithium-ion batteries aboard two Dreamliners to overheat last January, they lifted the grounding in April after Boeing made changes in the battery system that included a steel containment box and a new venting system. Since then the number of Dreamliners in service has doubled to more than 100.
In July, an Ethiopian Airlines 787 parked at London's Heathrow Airport caught fire. No one was injured, but the damage was extensive. Investigators have focused their inquiry on emergency-locator beacons made by another company and installed on thousands of airplanes world-wide
The Dreamliner still faces more routine technical problems. Top officials from long-haul low-cost airline Norwegian Air Shuttle ASA were in the U.S. Tuesday to discuss with Boeing the carrier's continuing headaches with the Dreamliner. The airline says it spent 101 million Norwegian kroner ($17 million) to lease replacement aircraft that burn more fuel and to provide accommodation, food and drink for delayed passengers.
Source: http://online.wsj.com
Thursday, January 02, 2014
Boeing's Biggest Union to Vote on Key Pact: Machinists' Decision Will Help Determine Assembly Site for 777X
The Wall Street Journal
By Jon Ostrower
January 2, 2014 6:02 p.m. ET
Boeing Co.'s largest union is set to vote Friday on a contract that will likely shape the power of organized labor at one of the U.S.'s biggest manufacturers for years.
If members of the International Association of Machinists and Aerospace Workers, which represents more than 32,000 Boeing employees, approve Boeing's eight-year contract offer, the aerospace company has vowed to assemble its planned 777X and manufacture its carbon-fiber wings in unionized factories in Washington state that assemble most of its jetliners.
If a majority rejects the offer, Boeing has threatened to assemble the 350-to-400-seat jet and its wings, which it plans to start delivering in 2020, in another state. Boeing, in disclosures to states reviewed by The Wall Street Journal, has said that work could eventually involve about 8,500 jobs. If it goes outside Washington, analysts say the company is likely to locate in a state less friendly to unions.
The 777X is pivotal for Boeing. The current 777 models that it will replace are part of the backbone of Boeing's top-earning jets—its best-selling model carries a $320 million list price before discounts. Boeing delivered at least 90 777s last year. Production of those current models is expected to be phased out gradually once Boeing starts manufacturing the 777X around 2017.
The contract deliberations have divided the union's local and national leaders. Members rejected an earlier offer for the contract, which would take effect in 2016, by a 2-to-1 margin on Nov. 13, with many criticizing Boeing's demands for deep concessions such as changes to the wage structure and a shift of future retirement earnings from the current defined-benefit pension to a 401(k) system.
A revised offer from Boeing early last month keeps the pension change and other key concessions, including increased health-care costs. But Boeing agreed to preserve the current wage structure that increases each member's hourly pay by 50 cents every six months—separate from planned raises and cost of living increases—and "zooms" workers to the top of a pay grade after six years, instead of indefinitely continuing the 50-cent increases in the November offer.
Local union leaders rejected the new offer, but other local groups of Machinists that have been formed in social media back the deal—a contrast to November when little support was evident for Boeing's first offer. International union leaders who called Friday's vote haven't explicitly endorsed the offer, but have emphasized that the contract would assure job security for Machinists in Puget Sound.
Thomas Buffenbarger, the union's international president, said that while he supports defined-benefit pensions, "I am experienced enough to know that we have now become the tail trying to wag the dog to keep it there when all other locations [at Boeing] have moved to the 401(k)-style system."
Mr. Buffenbarger, in an interview, argued that a deal is urgent, because he expects Boeing to decide soon where to build the 777X wings.
"We're out of time," he said, adding that if they don't strike a deal now, Boeing would likely be "even more entrenched the next time around" in negotiations for the 2016 contract.
Tom Wroblewski, president of the local union, said in a late-December message in the union's newsletter that the deal provides a "weak promise of job security" and reiterated the local leadership's recommendation to reject the deal. He declined further comment through a spokesman.
The vote comes weeks after Boeing announced the biggest cash deployment in its history, with plans to return $10 billion to shareholders and increase the company's regular quarterly dividend by 50%. That move angered many workers.
Boeing, which is likely to post a record profit for its commercial unit for 2013, has said that intense competition requires it to reduce costs.
"The airplanes we are selling today are at significant relative price discounts compared to those in the past," Alan May, vice president of human resources for the commercial unit, wrote in a letter to Machinists.
Mr. May urged members to ratify the contract and said placing the 777X manufacturing in Puget Sound "will help us establish in this region a skill base...upon which to build innovations for the future."
After November's vote, Boeing solicited proposals from other states for the 777X work, eventually receiving bids from 22 states for 54 possible locations. It has said it narrowed that list down, but didn't elaborate.
Should the membership reject the deal, Mr. Buffenbarger expects Boeing to find a site outside of Washington state for the 777X's wings. Boeing could still choose to assemble the jet in Puget Sound, adding a logistical challenge to moving the massive wings to the final assembly site.
Boeing already makes some of its other main widebody passenger jet, the 787 Dreamliner, in a nonunionized plant in South Carolina, which it has indicated it plans to expand. Putting the 777X work elsewhere would leave Puget Sound primarily making the company's single-aisle 737 planes, some 787s and a limited number of 767s and 747s, an important part of its business but still a major reduction in the overall capacity and importance of those factories.
Source: http://online.wsj.com
By Jon Ostrower
January 2, 2014 6:02 p.m. ET
Boeing Co.'s largest union is set to vote Friday on a contract that will likely shape the power of organized labor at one of the U.S.'s biggest manufacturers for years.
If members of the International Association of Machinists and Aerospace Workers, which represents more than 32,000 Boeing employees, approve Boeing's eight-year contract offer, the aerospace company has vowed to assemble its planned 777X and manufacture its carbon-fiber wings in unionized factories in Washington state that assemble most of its jetliners.
If a majority rejects the offer, Boeing has threatened to assemble the 350-to-400-seat jet and its wings, which it plans to start delivering in 2020, in another state. Boeing, in disclosures to states reviewed by The Wall Street Journal, has said that work could eventually involve about 8,500 jobs. If it goes outside Washington, analysts say the company is likely to locate in a state less friendly to unions.
The 777X is pivotal for Boeing. The current 777 models that it will replace are part of the backbone of Boeing's top-earning jets—its best-selling model carries a $320 million list price before discounts. Boeing delivered at least 90 777s last year. Production of those current models is expected to be phased out gradually once Boeing starts manufacturing the 777X around 2017.
The contract deliberations have divided the union's local and national leaders. Members rejected an earlier offer for the contract, which would take effect in 2016, by a 2-to-1 margin on Nov. 13, with many criticizing Boeing's demands for deep concessions such as changes to the wage structure and a shift of future retirement earnings from the current defined-benefit pension to a 401(k) system.
A revised offer from Boeing early last month keeps the pension change and other key concessions, including increased health-care costs. But Boeing agreed to preserve the current wage structure that increases each member's hourly pay by 50 cents every six months—separate from planned raises and cost of living increases—and "zooms" workers to the top of a pay grade after six years, instead of indefinitely continuing the 50-cent increases in the November offer.
Local union leaders rejected the new offer, but other local groups of Machinists that have been formed in social media back the deal—a contrast to November when little support was evident for Boeing's first offer. International union leaders who called Friday's vote haven't explicitly endorsed the offer, but have emphasized that the contract would assure job security for Machinists in Puget Sound.
Thomas Buffenbarger, the union's international president, said that while he supports defined-benefit pensions, "I am experienced enough to know that we have now become the tail trying to wag the dog to keep it there when all other locations [at Boeing] have moved to the 401(k)-style system."
Mr. Buffenbarger, in an interview, argued that a deal is urgent, because he expects Boeing to decide soon where to build the 777X wings.
"We're out of time," he said, adding that if they don't strike a deal now, Boeing would likely be "even more entrenched the next time around" in negotiations for the 2016 contract.
Tom Wroblewski, president of the local union, said in a late-December message in the union's newsletter that the deal provides a "weak promise of job security" and reiterated the local leadership's recommendation to reject the deal. He declined further comment through a spokesman.
The vote comes weeks after Boeing announced the biggest cash deployment in its history, with plans to return $10 billion to shareholders and increase the company's regular quarterly dividend by 50%. That move angered many workers.
Boeing, which is likely to post a record profit for its commercial unit for 2013, has said that intense competition requires it to reduce costs.
"The airplanes we are selling today are at significant relative price discounts compared to those in the past," Alan May, vice president of human resources for the commercial unit, wrote in a letter to Machinists.
Mr. May urged members to ratify the contract and said placing the 777X manufacturing in Puget Sound "will help us establish in this region a skill base...upon which to build innovations for the future."
After November's vote, Boeing solicited proposals from other states for the 777X work, eventually receiving bids from 22 states for 54 possible locations. It has said it narrowed that list down, but didn't elaborate.
Should the membership reject the deal, Mr. Buffenbarger expects Boeing to find a site outside of Washington state for the 777X's wings. Boeing could still choose to assemble the jet in Puget Sound, adding a logistical challenge to moving the massive wings to the final assembly site.
Boeing already makes some of its other main widebody passenger jet, the 787 Dreamliner, in a nonunionized plant in South Carolina, which it has indicated it plans to expand. Putting the 777X work elsewhere would leave Puget Sound primarily making the company's single-aisle 737 planes, some 787s and a limited number of 767s and 747s, an important part of its business but still a major reduction in the overall capacity and importance of those factories.
Source: http://online.wsj.com
Friday, December 27, 2013
Japan Approves Spring Air's Low-Cost Venture: Approval Comes Amid Political Tensions Between China and Japan
The Wall Street Journal
By Joanne Chiu
Dec. 27, 2013 1:46 a.m. ET
HONG KONG—Japan's civil aviation regulator has approved the launch of Spring Airlines Co.'s budget-carrier joint venture in the country, clearing a major hurdle for the Chinese airline as it prepares for a May 2014 launch.
Spring Air's plan to set up a low-cost venture in Japan would give China's biggest budget carrier by revenue more access to the Japanese market, but it comes as political tensions between the nations continue to linger.
The venture couldn't come at a worse time, as the China-Japan territorial spat stifles demand for business and leisure travel between the two countries. Spring Air had planned to start its low-cost venture in Japan last year, but the plan was delayed because of the dispute.
The number of Chinese tourists to Japan fell 21% in the first nine months of this year to 1.3 million, while Japanese visitors to China are down 24% during the same period. On Thursday, a surprise visit by Japanese Prime Minister Shinzo Abe to a shrine linked to the nation's militarist past threatens to further impact diplomatic relations with China and hurt demand for travel between the two countries, say analysts.
Spring Air Japan Co. said Thursday it received approval for the Tokyo-based airline last week, and will launch twice-daily flights between Narita Airport near Tokyo and the cities of Takamatsu and Saga from the end of May. It is also planning flights between Narita and Hiroshima.
While Spring Air hopes to link connecting traffic from China through the Narita hub, it has been unable to secure rights to fly there from its Shanghai base, a route that for years has been dominated by state-owned rival China Eastern Airlines Corp.
Spring Air in China now operates international services connecting Shanghai with the Japanese cities of Saga in the southwest, Takamatsu in the west and Ibaraki, northeast of the capital, as it awaits rights to fly to Tokyo, underscoring the difficulties the carrier faces as it competes with China's large established airlines.
The airline would also face stiff competition from other budget carriers, such as Jetstar Japan and Peach Aviation.
Spring Air Japan, 33% of which will be owned by the Shanghai-based carrier, said earlier it would add more domestic and international services to China later.
The rest of the new airline will be controlled by a group of Japanese investors in the private-equity, travel and information-technology industries, according to Spring Air, which has declined to disclose further details.
Spring Air Japan hopes to boost its fleet size to around 20 Boeing Co. 737-800 jets, which can each seat 189 passengers, five years after it starts service with three planes, the carrier said earlier.
Source: http://online.wsj.com
By Joanne Chiu
Dec. 27, 2013 1:46 a.m. ET
HONG KONG—Japan's civil aviation regulator has approved the launch of Spring Airlines Co.'s budget-carrier joint venture in the country, clearing a major hurdle for the Chinese airline as it prepares for a May 2014 launch.
Spring Air's plan to set up a low-cost venture in Japan would give China's biggest budget carrier by revenue more access to the Japanese market, but it comes as political tensions between the nations continue to linger.
The venture couldn't come at a worse time, as the China-Japan territorial spat stifles demand for business and leisure travel between the two countries. Spring Air had planned to start its low-cost venture in Japan last year, but the plan was delayed because of the dispute.
The number of Chinese tourists to Japan fell 21% in the first nine months of this year to 1.3 million, while Japanese visitors to China are down 24% during the same period. On Thursday, a surprise visit by Japanese Prime Minister Shinzo Abe to a shrine linked to the nation's militarist past threatens to further impact diplomatic relations with China and hurt demand for travel between the two countries, say analysts.
Spring Air Japan Co. said Thursday it received approval for the Tokyo-based airline last week, and will launch twice-daily flights between Narita Airport near Tokyo and the cities of Takamatsu and Saga from the end of May. It is also planning flights between Narita and Hiroshima.
While Spring Air hopes to link connecting traffic from China through the Narita hub, it has been unable to secure rights to fly there from its Shanghai base, a route that for years has been dominated by state-owned rival China Eastern Airlines Corp.
Spring Air in China now operates international services connecting Shanghai with the Japanese cities of Saga in the southwest, Takamatsu in the west and Ibaraki, northeast of the capital, as it awaits rights to fly to Tokyo, underscoring the difficulties the carrier faces as it competes with China's large established airlines.
The airline would also face stiff competition from other budget carriers, such as Jetstar Japan and Peach Aviation.
Spring Air Japan, 33% of which will be owned by the Shanghai-based carrier, said earlier it would add more domestic and international services to China later.
The rest of the new airline will be controlled by a group of Japanese investors in the private-equity, travel and information-technology industries, according to Spring Air, which has declined to disclose further details.
Spring Air Japan hopes to boost its fleet size to around 20 Boeing Co. 737-800 jets, which can each seat 189 passengers, five years after it starts service with three planes, the carrier said earlier.
Source: http://online.wsj.com
Thursday, November 28, 2013
Iran sanctions deal sparks hunt for vintage plane parts
A Boeing 747 set to be
dismantled is seen in the recycling yard of Air Salvage International
(ASI) in Kemble, central England November 27, 2013.
REUTERS/Stefan Wermuth
(Reuters) - While foreign ministers raced to Geneva for a crucial phase of talks over Iran's nuclear activities earlier this month, passengers with the country's national airline faced a little-noticed drama on the other side of the world.
As a 37-year-old Boeing 747 climbed out of Beijing bound for Tehran, the Iranian crew received a cockpit alert that one of the jumbo jet's four Pratt & Whitney engines was on fire.
The Iran Air pilots shut the engine down, activated a fire suppression system and flew back to the Chinese capital.
Both the November 8 incident and the actions taken to remedy it, as reported by accident database Aviation Herald, highlight the juggling act needed to keep Iran's fleet in the air after years of sanctions and challenges in procuring parts.
The relief plane that was dispatched to pick up stranded passengers is not just a jet but a time capsule, symbolizing the 34-year chill in ties between the United States and Iran.
It entered service weeks before the 1979 hostage crisis and is the only original 747-100 jumbo still flying passengers. Its resale value of $60,000 would not pay for fuel for the trip.
For years, aircraft such as these have been kept in service through parts imported on the black market, cannibalized from other planes or reproduced locally, aviation sources say.
Now, following last week's interim deal to ease a decade-long standoff over Iran's nuclear activities, Tehran will be allowed limited purchases of aircraft parts and repairs.
The immediate problem Iran faces is that some of its aircraft are so old that parts may not be readily available. The 747-100 was first launched in 1966 and Boeing hasn't built a new one since 1982.
"The last 747-100 we saw was about 10 years ago," said Mark Gregory, head of Europe's largest aircraft recycling company, UK-based Air Salvage International.
On paper, Iran's need for parts could be a boon for salvage firms and any second-hand stockists who have had unwanted bits of the oldest types used by Iran accumulating dust for years.
"Everybody is lucky if somebody wants to buy because it is a dead market. These parts don't sell like fresh bread from the baker," said Derk-Jan van Heerden, general manager of Netherlands-based Aircraft End-of-Life Solutions (AELS).
Barring a full lifting of sanctions, the volumes involved are not enough to make much difference to the profits of global aerospace firms and parts manufacturers, analysts say.
But the renewal of old business relationships marks the tentative early steps of a process that could, depending on diplomacy, resuscitate a market frozen in time for a decade.
Iran is already indicating that sanctions relief may plant a seed for future aircraft purchases if economic ties are fully restored. Diplomats caution that depends on the uncertain outcome of months of detailed negotiations that lie ahead.
"With the new deal made in Geneva, hopefully we will be able to purchase parts directly from manufacturers and not from middlemen for a higher price," said a senior Iranian official.
"We are looking forward to the time when sanctions are lifted and then we will purchase 250-400 planes, whether from Boeing or Airbus," he said, speaking on condition of anonymity.
Jetmakers, salvage firms and parts suppliers have responded cautiously and stress nothing can be done without approval. But Iranian officials say people claiming to represent at least one foreign firm have made overtures as the sanctions thaw loomed.
"We will first have to learn about possible changes in the legal situation in detail before we can make any business assessment," a spokesman for Europe's Airbus said.
A spokesman for Boeing declined comment.
Van Heerden, who is also deputy director of the Aircraft Fleet Recycling Association, said the industry has end-user agreements designed to avoid parts being used illegally.
CUTTING OUT MIDDLEMEN
Last week's deal calls for licensing of an unspecified quantity of aircraft parts and services for Iran's fleet.
But the mechanism and timing remain unclear and governments are expected to keep a strict eye on how funds are spent.
"I suspect there will be a tight rein initially on who supplies which parts to Iran. It is in the interests of all the governments and the manufacturers to ensure that there are no issues over the quality of the parts being supplied," said Bill Cumberlidge, executive director of leasing firm KV Aviation.
Items likely to be closely scrutinized include tail parts for the oldest Boeing 747s, which until 1980 were made with depleted uranium as counterweights, until tungsten took over.
An Iranian airline official said carriers were waiting for news on how and where any unfrozen funds could be deployed.
"The first issue would be that of finance and banking transactions. There are many planes out there but the problem has always been that we cannot buy them," he said.
The lack of parts has not prevented Iran Air and three others - Iran Aseman Airlines, Kish Air and Mahan Air - from passing safety audits of the International Air Transport Association.
"Many middlemen provided us with aircraft parts and even once one plane, carrying hundreds of parts, landed at (Tehran) Mehrabad airport," the senior Iranian official said.
"Iran managed to get everything it needed for its airplanes; even some very sophisticated parts."
But there has been a spate of reported incidents involving items with a limited life such as engines and landing gear, and the cost of running a covert re-supply operation has been high.
Parts that Iran might now seek to buy could cost anything from a few dollars for a tray table to millions of dollars for an engine. Airbus and Boeing may themselves have to scour the second-hand market for parts for old jets they no longer have.
In addition to parts, Iranian airlines also urgently need training, said a Dubai-based consultant whose clients include Iranian carriers. Poor training of Iranian pilots on elderly Russian aircraft was blamed for a series of crashes that killed more than 190 people in 2009, leading the Iranian authorities to clamp down on purchases of Russian equipment, he added.
Iran has an active fleet of 189 passenger aircraft with an average age of 22 years. It also has 76 in storage with an average age of 24 years, says UK aviation consultancy Ascend.
The situation for flag carrier Iran Air is worse. Its 37 active aircraft have an average age of 24 years. Two of its active Boeing 747s have been flying for close to four decades.
The fleet includes some planes for which there are ample parts, such as the Fokker 100 and MD-80. Many have been recently mothballed, making their spares relatively cheap.
Others, like the earliest vintage Boeing 747s and the first Airbus A300 aircraft, depend on a shrinking supply of parts or a steady flow of organ transplants from other "donor" aircraft.
"Ultimately the most cost-effective solution for Iran, when sanctions allow, would probably be to upgrade their fleet. There comes a stage when it becomes impossible to support aircraft because of their age," Air Salvage's Gregory said.
Source: http://www.thestar.com.my
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