While one story, the 737 MAX, dominated the news in 2019, it wasn’t the only major event in the industry. Here’s our list of the top stories of 2019.
- The Boeing 737 MAX debacle
After two crashes claiming 346 lives, Boeing’s actions essentially wrote the next business school case study of how not to act after a crisis. The lack of leadership and transparency shown by Boeing was abysmal, and their arrogance and obfuscation cost the CEO his job and extended the grounding of the aircraft, now likely to fly again late in the second quarter of 2020 at best. In the aftermath, problems with 787 quality, the KC-46 not meeting specifications, the 777X being delayed, and the Spaceliner capsule failing to reach the space station exacerbated Boeing’s problems, resulting in management changes. It is now the company that can’t seem to do anything right, has deferred a decision on the NMA, and is facing losses we estimate a $14 billion from the MAX problems alone. And the crisis is likely to get worse before it gets better.
- Boeing fires CEO and legal counsel that led the crisis management strategy that backfired
Just before year end, Boeing fired it CEO Dennis Muilenburg and its chief legal counsel and architect of the turnaround strategy Judge J. Michael Luttig. These gentlemen were responsible for crisis management, and mismanaged communications to alienate regulators, customers, pilots and flight attendants, suppliers, passengers, and employees, during the process. While the failure was obvious early on, and we called for the CEO to be removed in early October, it took the board a while to replace Muilenburg and replace him with one of their members, David Calhoun, to take charge. Unfortunately, it is difficult to change a culture if you were part of the team that created it, so the jury is out on to what degree the changes will be beneficial.
- The A321XLR takes the 757 market from Boeing
Airbus has taken a substantial 4:1 lead over Boeing in orders for large narrow-body aircraft. The A321neo is clearly a better airplane than the 737 MAX9, and the A321XLR provides the range and payload that beats the 737 MAX10. Boeing once owned the middle of the market with the 757 and 767, but has ceded that market today to the A321XLR on the lower end and the re-engined A330-800 on the high end of that segment. Advantage Airbus, who are continuing to push product development and box-in Boeing strategically. The forthcoming A322 and A220-500 that are could be announced next year will further Boeing’s market share difficulties in the narrow-body market.
- The Embraer acquisition by Boeing is in trouble with European regulators
Boeing’s attack on the Bombardier CSeries with the US Trade Representative backfired on the company. The added financial pressure from this attack on their order with Delta forced Bombardier into a sweetheart deal with Airbus, who gained the re-named A220 program at a cost of $1. To counter that program, Boeing agreed to acquire an 80% share in Embraer’s commercial business for about $5 billion. The European anti-competitive agency is currently reviewing this transaction, which was initially scheduled to close in 2019. Embraer also had the first delivery of the E195-E2 and first flight of the E175-E2 in 2019, but has a very light backlog when compared with the Airbus A220.
- Bombardier exits commercial aviation to focus on business jets
Bombardier completed a sale of the CRJ program to Mitsubishi, which needs both the aftermarket network and certification expertise, and spun off the Q400 program to a resurrected De Havilland Canada. The company is now clearly focused on the business aircraft market, and certified the Global 5500 and Global 6500 to join the Global 7500 in the marketplace in 2018, and is ramping production of Globals before the move to a new facility at Toronto Pearson in 2023.
- Rolls-Royce finds solutions to Trent problems, but not until 2022
Rolls-Royce has blade issues with the Trent 1000, but will not be able to replace all of the blades until 2022. In the interim, it will work with customers in a two step process with interim and final solutions as production ramps up. 787 operators with the Trent 1000 face some maintenance delays as blades are periodically replaced.
- Pratt & Whitney solves most GTF problems, albeit issues persist
Pratt & Whitney is also ramping up solutions for blades that may fracture, and is replacing older blades with newer versions. Similar to Rolls-Royce, PW is building its replacement blade capacity and should complete fleet replacements by late 2020.
- The 737NG has a structural problem in a key area
Discoveries were also made with respect to older 737NG models that the “pickle fork” that holds the wing and fuselage together is subject to premature cracking, causing additional down-time for airline customers and another quality issue for Boeing to solve. In addition, the NTSB, in the wake of the 2017 uncontained engine failure at Southwest that resulted in a fatality, is recommending strengthening the engine nacelles of the CFM-56 engines on the NG family. Given that similar technology is utilized on the MAX, further issues may still emerge before that aircraft can return to service.
- Daher acquires Quest
Daher, maker of the TBM 940 turboprop, acquired Quest, manufacturer of the Kodiak, and is increasing its presence in the US. The company is growing rapidly as a key supplier to Airbus and is expanding its turboprop market.
- Gulfstream reveals G700 to compete with Bombardier Global 7500
In the game of leapfrog, Gulfstream introduced a new model with a larger cabin at the top of the business jet market. The G700 and Global 7500 are now very close in specifications, with the Global retaining longer range but the G700 having a speed advantage. This battle will be interesting to watch.
