AIR COGITATIO

This note is an update of our 2020 data for the 737 MAX RTS and we also expand our order and production forecast for 2030 and beyond.

Bank of America (BofA) and Aviation Week have issued a detailed analysis of airline requirements for a new Boeing aircraft this week.   The study is a more customer focused follow on to previous BofA notes on the topic of the next BCA middle of the market offering.  The key points of the studies are:

The current Boeing narrowbody offering is perceived as inadequate
Roughly half the airlines contacted want the new aircraft by 2027
Propulsion readiness remains a challenge for a…

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This signal and the noise were clearly heading F-35A’s way, and media rumors proved entirely correct. We had initially expected the Dassault Rafale to triumph based on a rather predictable Swiss CONOPS, the previous evaluation, and the overkill that F-35 would provide the tiny Federation airspace (about the size of Nellis AFB’s range).

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The recovery from the SARS-CoV-2 (COVID-19) pandemic is not going to be all smooth sailing. Society and industry have transitioned from violent contraction to stabilization and perhaps soon, a Friedman-ian “plucking model” moment for some of the world’s advanced economies. The characteristics of the next phase of the crisis are thus going to materialize with significant global disparities.. For the aerospace industry, the likelihood of disruption will migrate away from reduced demand but will be significantly impacted by the societal and political aftershocks of the crisis.

This note takes a look at the most recent status of the MAX fleet as it returns to airline service.

Honestly, The NMA go/no go story is beginning to look like the Zoom meeting platform.  You just can’t wait to get rid of it. The issue for Seattle continues to center around the necessity to “protect and preserve”.

Situation Analysis

Market needs and conditions have changed, and are challenging over the next 2-4 years. Boeing has fallen behind Airbus in narrowbody market share, which was already dropping before the 737 MAX grounding.  Airbus now holds a 65%-35% lead in narrow-body backlog, a position that is increasingly worrisome to Boeing management and its shareholders.

The results are in. No real surprises in our latest joint AIG/AIR survey except perhaps for the strong showing of Charleston as a viable site for the next Boeing aircraft. MAX is viewed generally as a failed program, never recapturing its initial market traction.

Much can be said about the Boeing results announced this week.  While we have kept a close look at the abominable financial statements over 2019 and 2020, it is the strategic implications, however, that drive our thinking in light of the 2020 results.  Our sentiment is significantly more negative when it comes to the future of the organization, and the “too big to fail” argument, while still valid, is no longer a guarantee of status quo for repeated organizational and leadership failures.

2021 is upon us, and we, for now, will refrain (until later this month) from voicing an outlook that would be too affirming.  Our survey is being analyzed and will be released as part of our 2021 Outlook.  You may have come across the results from our AirInsight Media colleagues,  but these are different,  our interpretation of the data received goes through an actual process of analysis and data correlation.  We will have the 30+ page report ready for you in a few days.

Several items are toping our list for the first week of 2021:

Boeing is facing another challenging year –  transitioning from the 737MAX crisis

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We were invited to speak at the BABC Transatlantic conference and had the opportunity to briefly address some of the items that are going to shape the future of the transatlantic alliance as a new US administration looks now increasingly certain to take over on January 21.

Friday afternoon conversation about Boeing product strategy and how important it will be for the company to act sooner rather than later.  We discuss the market requirements post pandemic, the industrial challenges impacting the choices of material and technologies and conclude that this is Boeing’s

Embraer has been sharing two CGI images of the rumored E3 turboprop regional aircraft.  This is an aircraft that we have been anticipating for the past five years or about. We have briefly discussed the proposed new design with FlightGlobal, and here are some of our preliminary thoughts on what can be deduced from these images:

What it says about Embraer:   the E3 work appears to have been marginally slowed by the now defunct Boeing-Embraer commercial venture.  Research resumed

We have revised our scenario for 737 RTS.  Our assumptions are:

Modification and return to service of in service aircraft will be the bulk of reentry in service aircraft for 2021.  With the effect of the COVID crisis diminishing throughout 2021,  it is fundamentally the market overall capacity at absorbing new airframes that will be the determining factor for 737 (and A320) delivery

These are the summary slides and audio of our webinar of 29 September with AirInsight discussing the outlook for UAC and COMAC.
The accompanying webinar audio is available here