AIR COGITATIO

As we return from Farnborough and another customer trip in East Asia, it’s an opportune moment to reflect on the state of the industry, having covered 25,000 steps and air miles over the past month. Farnborough is no Le Bourget, and we certainly appreciate that—not only because of the near impeccable organization, which is often lacking south of the Channel, but also due to the unusually cooperative weather this time around.

How do we approach this year’s industry “family reunion”? The headlines are still dominated by Boeing, supply chain challenges…read more

As we have indicated in prior notes, there is a fair amount of uncertainty driving markets, forecasts, and programs at this particular juncture. Essentially, the bulk of our work and that of others focuses on further differentiating “the signal from the noise.”

In “The Signal and the Noise: Why So Many Predictions Fail — but Some Don’t,” Nate Silver provides a unique take on the art and science of prediction. Silver primarily emphasizes the importance of Bayesian reasoning, which involves updating the probability of a hypothesis as more supporting evidence becomes available. Instead of making absolute predictions, he advocates for probabilistic forecasts, which express outcomes in terms of likelihoods. This approach, which we agree with, helps in understanding the uncertainty and potential variability in predictions.

In aerospace forecasting or research in general, the core challenge in prediction is to…read more

Ah, it seems pontificating on Boeing’s missteps has become quite the trend in this age of rampant opinionating and obligatory ratings. Suddenly, everyone from the unwashed masses to the self-proclaimed experts feels compelled to chime in on topics they’ve never even pondered before. The 2024 Boeing bashing brigade has truly become a fashionable pastime, or a badge of honor a la UA flag emoji. It’s a veritable Ephesian tumult of amateur analysis, a cacophony of (overpaid) armchair pundits flexing their expertise in fields they’ve barely dipped a toe into. This chaotic spectacle mirrors the narcissistic zeitgeist of our times, where clarity takes a backseat to confusion, and genuine insights are drowned out by Suburra’s chaos.

“Try not to screw up. This will satisfy a few people, and amaze everybody else.”

Forrest Gump – Greenbow, AL

Life often presents us with a mix of corporate and personal challenges. We all make mistakes occasionally, but it would appear that a particular aerospace company seem to have stumbled upon an especially unpleasant box of chocolates lately. This raises the question: are we merely handed the box of chocolates, or do our choices determine where we obtain it from, consequently shaping the quality of the chocolates inside? The same question can be posed about Boeing: is the current situation the result of three-plus decades of mismanagement of talent, resources, and product

Ah, the joy of dissecting reality – where the media’s version collides head-on with the trivial facts on the boring old ground in Week 10 of an already troubled 2024. This week’s masterpiece (or mess, depending on your perspective) beautifully showcases the abyss between what the average Joe is being fed (and consequentially believes), what the media concocts, and what the industry pretends to care about. Hats off to the OEMs and regulators, diligently ensuring our airborne chariots meet the highest safety standards (sometime expressed by their communicators as if they’re curing world hunger). But this week, let’s give a round of applause to the “hypocritical Victorian gent” (thank you again, Tom Wolfe), who’s managed to turn unrelated events into a circus that’s no different from the standard operation of this industry over the countless eons of safety strides.

Heli Expo is no more; Long live Verticon from 2025.  Despite the industry seemingly experiencing stable growth, the EVTOL sector, often compared to a kindergarten reminiscent of the accidental mass hallucination called Very Light Jets (VLJs), continues to dominate headlines. The EVTOL fallacy has led some seemingly rational industry actors to embrace exuberant projections as gospel. However, realizing these projections remains contingent on aligning infrastructure, business models, and regulatory environments. We anticipate that the EVTOL market will not achieve stability until 2040, solidifying itself as a subsegment of the vertical lift market. A subsequent growth phase is likely to strengthen between…

The discussion surrounding Boeing has grown increasingly repetitive and, let’s face it, somewhat dull. This monotony reflects the media cycle’s impact on inherently incompatible issues. The resolution of Boeing’s issues will be time-consuming, requiring a thorough search for a new strategy and a renaissance of sorts.

As we have consistently argued, the challenges facing Boeing are more intricate than the public narrative suggests. While the company’s overall commercial business segment is flourishing, it is not being captured and capitalized upon optimally for various reasons ranging from location(s), production systems, workforce, ingrained management, insular behaviors, etc.. To revitalize Boeing, a second coming, if you will, it is imperative for the company to reduce its dependence on the 737…

The PNAA conference always provides an opportunity to gauge the pulse of the Pacific Northwest Cluster. Over the years, the conference has undergone positive transformations, particularly in the last two years, embracing a more regional focus. It has shifted its goals to cater primarily to the needs of its membership, a direction that aligns with the current trend of breaking away from the homogeneity prevalent in the conference circuit. Nowadays, many conferences tend to revolve around identical topics, feature the same speakers, and delve into the customary FL300 subjects. In contrast, PNAA introduces a breath of fresh…

The first one is obviously China. The second one is slightly murkier, it is about disclosure, or lack thereof, about a specific situation. Just as in the China Syndrome, failure to disclose follows the law of unintended consequences. That rarely positive but often negative effect or as French economist Frédéric Bastiat defined as the “seen” and the “unseen.”

We are increasingly drawing parallels between the aerospace industry and the developments that occurred in the automotive industry during the 1980s and 1990s..  Do you recall the 1986 movie “Gung Ho”? The plot revolves around a struggling American automotive plant in a small rust belt town that gets acquired by a Japanese corporation. The incoming Japanese management introduces a disciplined and efficient work environment, initially causing tension and misunderstandings among the American workers. Interestingly, most of the movie was filmed not far from our home office in the Greater Pittsburgh area, in the charming town of Beaver by the Ohio River. The key point here is, as you may have guessed, our beloved national Boeing company and its vintage 1960s production system…

That feeling of getting stuck in a time loop, making the same mistakes over and over again, and not being able to drag yourself out. Sounds familiar? ‘Groundhog Day’ is a 1990s movie that tells us the story of a Pittsburgh-based weatherman, a fairly arrogant (!) and condescending (!) individual, that finds himself stuck in a time loop, reliving the same day over and over, making mistakes, and ultimately learning from those mistakes to get himself out of that loop.

If this sounds familiar and reminds you of a commercial aircraft company based in the Pacific Northwest, you might be onto something.

In light of the MAX9 incident and the subsequent production audit, along with the associated disruptions, we have reevaluated our Boeing production estimates. These estimates also incorporate input from Aero Analysis Partners.
In general, we anticipate the majority of the disruption to affect Boeing in the first half of 2024. Although we were initially optimistic about rollouts for 2024 (500+)

“This is a very interesting situation!”

Brig Gen James “Jimmy” Stewart (George Bailey – It’s a Wonderful Life) 

In 2024, a crucial year looms for the industry and the economy. Our intention in this note is not to delve into the forthcoming US presidential election, a critical event promising new standards of absurdity and intelligence vacuousness from both sides of the aisle. We may, however, address the prospect of Trump/Biden II administrations on geopolitics and defense procurement in our 2024 forecast early next year. We contemplated titling it after Edgar A. Poe’s short story: “The System of Doctor Tarr and Professor Fether,” but we have made that point before (an asylum where lunatics run the show) and will spare you the validity of the story at this point.

“So, in conclusion and caveat emptor for investors: Dear investors, do enjoy this dead cat bounce and bear market sucker’s rally…don’t wait too long until you jump ship while the financial Titanic hits the next financial iceberg: you may get squeezed and crashed in the rush to the lifeboats.”

Professor Nouriel Roubini , NYU, 2009

Our team “enthusiastically” navigated the bustling streets of Manhattan in New York City last week, despite the established chaos caused by construction, oversized limos, delivery trucks, and other customary nuisances. The holiday season is indeed upon us. Moving from one meeting location to another over three hectic days reminded us that the spirit of the season is present. European tourists are flocking to New York City, where the “true meaning” of the season can be experienced on the busy sidewalks of 5th and Madison Avenues.

Sorry Dorothy, but no. The economy continues to perplex us. To paraphrase Sir Winston, it remains “a riddle wrapped in a mystery inside an enigma” as we approach the conclusion of the 2023 fiscal year.

We assert that the economy is in a worse state than it appears, despite optimistic forecasts and the dismissal of recession indicators. Our primary focus centers on US and EU debt levels and labor market indicators. As debt continues to rise, job data still reveals a significant gap, indicating that the recovery from the 2020 government lockdowns has been insufficient. Even after the pandemic ended, millions of people have not returned to the labor force. In the past, we have criticized the U-3 as the official measure of unemployment. For us, U-6 remains the only measure providing a truer reflection…

The week was replete with what we would term “revealing tidbits” that point toward either program-impacting events or the identification(s) of  emerging trends indicative of a given OEM outlook,  particularly Sierra Nevada and Boeing for the SAOC program.  This program will be discussed in a separate note soon.

We have had concerning economic news over the past few weeks, yet we remain uncertain about the overall direction of the US economy, there are negatives and some positives, today’s factory orders should be another interesting indicator. However, as we have often mentioned, US

It was a brief yet eventful week, brimming with noteworthy developments as we approach the final five weeks of 2023. Despite a wave of somewhat unfavorable economic news and data, a moment of reckoning is upon us. Ignoring the inevitable consequences while running the basement printer far too long is no longer an option.

The San Francisco Fed weighed in on the Bureau of Economic Analysis’ revised estimates, revealing lower household disposable income and higher personal consumption than initially reported for the fourth quarter of 2022 and the first quarter of 2023. These adjustments led to a significant decrease of over $50 billion in the Bureau’s measure of aggregate personal savings. Accumulated excess savings, which peaked

For AirIntelPro research customers: the next AeroSeven will be on November 27

As mentioned last week, we happily skipped the painful trip to Dubai for a quick visit to our nation’s capital for ATRIF. Once again, it was a very productive session. Additionally, while waiting for a flight at Pittsburgh airport this morning, we were attentively listening to Bloomberg news. Economist…

This week, let’s shift our focus away from the world of finance and delve into the tangible realm of program execution, examining the current status of aerospace programs and deliveries. As Norm Augustine aptly put it, “If stock market experts were so expert, they would be buying stock, not selling advice.” #22

Airbus looks like they might make it – Airbus reported delivering 71 aircraft in October, marking an 18% year-on-year increase and bringing the 2023 year-to-date total to 559. The company aims for 720 deliveries in 2023, with 161 planes left to achieve this target.