With the Paris Air Show occurring this week, the commercial aerospace industry and its two dominants, Airbus and Boeing, the bi-annual event provides opportunity to tout the latest achievements in new aircraft and business services capabilities. Instead for Boeing, this will be an event where damage control remains prominent and where design and supply network challenges are becoming far too visible.
Airbus has already initially stolen the spotlight by premiering a new, noticeably younger senior management team discussing plans not only for Industry 4.0 and additive manufacturing enhancements but plans to address concerns for climate change impact on air travel. Noted that new technologies would lead to new airplanes very different in look from today’s modern aircraft.
The Lead-Up for Boeing
Leading up to this week’s event, the news cycle concerning the ongoing global grounding of the Boeing 737 MAX aircraft remains one of general concern.
Earlier this month, the U.S. Federal Aviation Administration (FAA) dropped another concerning directive indicating that more than 300 in-service 737 aircraft, including the MAX version, may have leading-edge slat wing components that could have been improperly manufactured and may not meet regulatory requirements. The agency indicated these parts could be “susceptible to premature failures or cracks’ and will order respective airlines to identify and remove the parts if their respective aircraft are affected.
Further, two U.S. lawmakers participating in a Congressional investigation of the 737 MAX incident indicated to the media that the aircraft manufacturer delayed the fix of the suspect MCAS sensor for more than a year before informing the FAA.
Last week, a top official of the FAA indicated that the 737 MAX could be back in the air by December, and further noted that the aircraft will be returned to service “when we believe it will be safe.” Yet, with the Paris show underway, The Wall Street Journal reported today that the FAA has signaled it is ready to start flight trials as early as this week.
Boeing CEO Dennis Muilenberg indicated this week that he was disappointed in the company’s communication lapses surrounding the ongoing crisis and promised greater transparency to rebuild public trust in the aircraft and in the company. He noted: “We’re going to bring a MAX back up in the air that will be one of the safest airplanes ever to fly.”
U.S. airlines American, Southwest and United have each extended their flight cancellations directly related to the MAX through September.
From our Supply Chain Matters lens, that statement understates the gravity of what can only be described as the single greatest threat to Boeing’s market reputation.
A published poll from The Wall Street Journal and NBC News indicate 25 percent of flyers would avoid flying in the 737 MAX, while 38 percent indicated they were not sure or had no opinion. In the poll conducted between June 8 and June 11, 37 percent indicated they would travel on the aircraft once regulators clear the MAX for operational service. That polling data implies how important it will be to restore public trust in the aircraft and CEO Muilenburg has readily acknowledged that rebuilding confidence among airline customer and the flying public will take additional time.
Industry reports indicate the Boeing and Airbus together received only one gross order in May compared with 68 orders in the same month last year. That is the significance of this week’s Paris show as any orders were deferred for last-minute bargaining and negotiation.
Boeing Supply Network Impacts
Last week, the WSJ reported that some 737 suppliers are reconsidering their prior decision to maintain a supply cadence equivalent to over 50 single-aisle per month, as inventories swell and the timeline for the MAX returning to service drags on. This week’s show provides the backdrop for face-to-face communication regarding supply network inventory and capacity strategies for individual suppliers.
On a positive note, as this blog highlighted in earlier updates, aircraft engine provider CFM International’s efforts to improve prior engine shortages during the crisis. Likewise, fuselage and airframe components supplier Spirit Aerosystems has maintained full production in order to catch-up with an expected boost in monthly production of single aisle aircraft.
Over the weekend, the CEO of CFM indicated that engine maker has essentially caught up with prior delays in delivering the LEAP engine for both the 737 MAX and the Airbus A320 neo. While Boeing cut its monthly 737 production output to 42 aircraft from 52, Airbus continues with a monthly production rate of 60, thus CFM matching that cadence afforded the ability to close the gap.
Meanwhile Boeing continues to work with various global airlines on mapping a coordinated plan addressing all of the various logistics related to bringing the 737 MAX back to operational service once regulators grant clearance for return to operational service.
Plans call for addressing the upwards of 500 aircraft that are either grounded across the globe for parked at various runways in the Seattle or San Antonio areas in storage after being produced.
One all of that is accomplished, Boeing will turn its attention to the existing 737 supply network in carefully orchestrated ramp-up of suppliers to previous and expected future monthly production volumes.
In the meantime, any hopes that Boeing will be able to maintain last year’s annual aircraft delivery performance remain in doubt.
New Aircraft Announcement
As anticipated, on the first day of the show, Airbus launched the A321 XLR, a longer-range version of the A321 neo and next iteration of the A321 program, that affords budget airlines a larger range in intercontinental flights. This new aircraft seeks to be the alternative to the out-of-production and stalwart Boeing 757 aircraft.
The European plane maker indicated that the aircraft provides longest single-aisle plane range in the world at 4,700 nautical miles. The plane can seat upwards of 244 passengers but is limited to 200 passengers on a longer-range routes. Announced was an order for 27 of this new aircraft from U.S. based Air Lease Corporation.
This new aircraft aims to steal the thunder from Boeing’s yet to be formally announced NMA (New Midsize Aircraft), known alternatively as the 797. Industry speculation is that Boeing may be delayed in any formal announcement of its planned new entry as a result of the ongoing 737 MAX crisis drain on resources.
Setback for the 777X Aircraft
The market anticipated 777X wide aisle aircraft has experienced a program setback regarding an engine component. In a revelation that reportedly stunned journalists and industry attendees, the head of commercial engines for General Electric indicated that unexpected wear in a compressor stator within the new GE9X engine will prompt a delay of several months while engineers redesign and test a new component. While GE reportedly still expects first flight of the 777X to take place later this year.
The development is yet another embarrassing setback for Boeing in that it was reportedly longer than many were expecting. As recent as Boeing’s last financial performance briefing, the program was touted as on-plan with initial two test aircraft produced in early March. The CEO of launch airline Emirates told reporters that he had initially been informed that first flight had been pushed out to the end of June but had slipped. Emirates plans call for taking first delivery in June of 2020, and the line has a reputation for demanding expected performance from aircraft manufacturers.
Some of our readers in the product management arena could argue that if Boeing turns up the burners in the NMA program, the manufacturer could stumble into similar flawed design decisions that occurred with the 737 MAX. Perhaps not- but only time and discipline will tell.
This will be a week that Boeing and its associated supply partners will want to pass as quickly as possible.
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