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The news that Ray Conner is being replaced at the helm of Boeing commercial comes as no surprise. Since January last year there was a definite sense of inevitability following the rise of Dennis Muilenburg as CEO.

It is logical and expected that Mr Muilenburg would surround himself with his own team and begin to shape it to begin moving forward with his own strategy. To that end, it became clear that Mr Conner and Mr Muilenburg were not singing the same tune for the past few months.

The appointment of Kevin McAllister to replace Mr Conner is the latest phase in what we would call the “financialization” of the Boeing company. Namely, a gradual migration away from core industrial activities towards a more balanced portfolio of production and service capabilities. This gradual shift had been initiated under the leadership of Jim McNerney and will now extend fully into the… Continue reading

In March, United Airlines announced it had done a deal with Boeing for 25 more 737-700s after its January deal for 40.  This deal was hotly contested by Bombardier for its CSeries.  The Boeing selection was a blow to Bombardier, but also seen as Boeing playing a weak hand .  United had both OEMs on the run.

Now United has decided to defer 61 737s, and it is going to save $1.6Bn in capex. United further noted it will convert these 737-700s into four -800s and MAX9s.  The 61 deferrals at $1.6Bn equates to $26m per aircraft.  This was the general understanding of the price level Bombardier was facing off against when trying to sell United the CS300.  We understand the airline operations people preferred the CS300 to the 737-700, but the financial people were looking at the killer Boeing offering.  Finance won.… Continue reading

Looking at the numbers through October 2016, we have the following table.

2016-11-14_15-23-49The -8 accounts for 66% of the 480 delivered 787s.  Last week the 500th 787 was seen in Seattle, being made ready for Air France.  GE has a big lead on the -8, with 67%.  However we can see once the -9 hit the market, interest in the -8 has fallen off considerably.  (One wonders, how big an issue has A330 pricing become?)  Interest in the -9 has been strong.  There has also been a distinct switch in engine interest moving to the -9 with Rolls-Royce leads with just over half the market.  This is an excellent result given that Rolls-Royce does not have access to a strong finance arm as GE does.

Boeing is churning out 787s at a remarkable clip.  Production looks like being over 115% higher this… Continue reading

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