Thursday, January 31, 2019

Boeing Cracks $100 Billion in Sales for the First Time in Its 102-Year History

Boeing surged after reporting a record cash gush for 2018 and cracking the $100 billion sales barrier for the first time in its 102-year history—and the U.S. planemaker says the best is yet to come.

Sales, earnings and cash are all poised to rise this year, building on fourth-quarter earnings that beat estimates, the company said in a statement Wednesday. The lone blemish: Free cash flow of $2.45 billion in the last three months of 2018 missed the $2.52 billion average of analyst estimates compiled by Bloomberg.

The upbeat forecast shows that Boeing still sees room for improvement as it works to overcome factory stumbles in its jetliner business and speed output of its cash-cow 737 planes. Boeing and Airbus, its European rival, are riding high on a historic sales boom rooted in low interest rates and a growing middle class, particularly in Asia.

“There’s a very strong guide and no hint that there’s anything that could derail this,” said Ken Herbert, an analyst with Canaccord Genuity.

The shares jumped 6.2% to $387.40 ahead of regular trading in New York. Through Tuesday’s close, Boeing had risen 13% this year, the third-best performance on the Dow Jones Industrial Average.

Exceeding Estimates

Revenue will climb to a range of $109.5 billion to $111.5 billion this year, up from $101.1 billion in 2018, the company predicted. Operating cash flow will be as much as $17.5 billion, about $2 billion more than last year.

Adjusted earnings will be $19.90 to $20.10 a share, Boeing said. That compared with the $18.44 average of analyst estimates compiled by Bloomberg.

All of Boeing’s main businesses posted double-digit sales increases in the fourth quarter, and the company expects the momentum to continue into 2019 as it emphasizes cross-selling initiatives. While the shares have gyrated in response to trade tensions between the U.S. and China, Boeing is still seen as a safe haven for its $490 billion backlog of unfilled orders.

The Chicago-based manufacturer sold more commercial jets than it made in 2018, tallying 893 orders with a value of $143.7 billion. Repeating that performance this year will be tougher as the company targets delivering a record 895 to 905 commercial aircraft while navigating a global economy fraught with geopolitical risk.

Downturn ‘Risk’

Still, some analysts are monitoring a recent spate of airline bankruptcies and sputtering economic growth in China for inklings of the next slump.

“The big risk is that we go into a downturn,” George Ferguson, an analyst with Bloomberg Intelligence, said in an interview prior to the earnings release.

Boeing has also been contending with parts shortages and costly out-of-sequence work in its jetliner factories. The company delivered 806 aircraft last year, falling shy of its target for 810 to 815, despite working deep into the year-end holidays to overcome engines and other shortages.

This year, Boeing is looking to increase output of its 737 jetliners by almost 10% while boosting production of the 787 Dreamliner. Deferred production costs for the Dreamliner program fell $584 million to $23 billion in the fourth quarter, reflecting improved per-plane profit as Boeing improved efficiency with which its carbon-fiber jets are built.

Max Production

Bringing suppliers along for the ride to stepped-up production will be challenging, particularly as engine makers cope with parts shortages of their own. But there were signs of progress in the late push to get back on schedule. Boeing delivered 51 of its upgraded 737 Max jetliners in December and 111 of the jets in the fourth quarter.

That’s crucial to “shore up confidence that the Max production system is making progress” ahead of 2019, when the redesigned aircraft family will account for nearly all of the 737 models that the planemaker builds, said Seth Seifman, an analyst at J.P. Morgan Chase.


Boeing ramps up its sales efforts behind the new 777X jet

After winning 51 orders for older 777 wide body jets in 2018, Boeing sales teams are now focused on persuading more airlines to buy the new 777X passenger airplane in 2019.

"We do see a high wave of replacement demand (for worn, older 777s) early in the next decade, but that means those sales campaigns are underway now," Boeing Chairman, President and CEO Dennis Muilenburg said Wednesday.

Muilenburg revealed the sales shift — planned and part of 777X program — during a call with analysts after Boeing released record fourth-quarter and full 2018 financial results.

Boeing so far has 326 orders for the 777X, which is so big it will have folding wingtips. Its last order came in June 2017.

Muilenberg said Boeing's two-pronged sales efforts to win 777X orders comes as the company also attempts to secure more orders for the classic 777 model, a strategy aimed at "building a bridge" between the old and new manufacturing programs.

The 51 777 classic orders Boeing won in 2018 strengthened the bridge between older and new models, he said. Both jets are made at Boeing Everett.

"We still have have some work to do to fill out that bridge," Muilenberg said. "Our confidence continues to grow in our ability to do that."

Boeing CFO Greg Smith also shared an update about the 777X program, which remains in the development and testing stage.

The company is building 777X test aircraft, including one for a first flight this year. The jets must pass all tests before U.S. aviation safety regulators certify the airplane as safe for passengers. Airlines are scheduled to get the new jet starting in 2020.

"Things are going well out there (Everett) today," Smith said from his office at Boeing's Chicago headquarters. "We've got very good early signs that the aircraft is moving into the production system smoothly and any challenges we have, we're working through and we know what they are. But so far so good."

Boeing will build five 777s a month in 2020, a combination of 777Xs and 777 classics. It builds 3.5 a month now.

(Andrew McIntosh - Puget Sound Business Journal) 

Southwest Airlines extends schedule, adds new seasonal routes

Southwest Airlines announced the addition of two weekend-only seasonal routes to its schedule. It also confirmed the return of seven seasonal routes that will resume in August.

The new nonstop options will connect the Texas airports of Dallas Love Field and Corpus Christi as well as Richmond, Virginia, and Tampa, Florida.

The new services were announced Thursday as Southwest extended its booking schedule through Oct. 1.

The low-cost carrier frequently reveals new or dropped routes during its regular schedule updates. But the update revealed Thursday was uncharacteristically quiet. No routes were discontinued, though some seasonal routes are ending and are expected to resume next year.

As for the additions, none featured daily or year-round schedules.

The Dallas-Corpus Christi route will begin Aug. 10. Southwest will offer one daily round-trip flight between the cities each Saturday. Southwest last flew the route nonstop in 1986, according to spokesman Dan Landson. The Tampa-Richmond flights will start the same date and will operate on both Saturdays and Sundays. Both routes will be seasonal, continuing into Southwest’s winter schedule.

Southwest also confirmed the return of seven seasonal, Saturday-only routes. All of the routes included in Thursday's announcement will continue into either the fall or winter schedules, depending on the route.

The full schedule details are below:

Dallas Love-Corpus Christi, Texas

Begins Aug. 10. One daily round-trip flight each Saturday. Seasonal.

Richmond, Virginia-Tampa, Florida

Begins Aug. 10. One daily round-trip flight each Saturday and Sunday. Seasonal.

Hartford, Connecticut-Fort Lauderdale, Florida

Returns Aug. 10. One daily round-trip flight each Saturday. Seasonal.

Buffalo, New York-Fort Lauderdale, Florida

Returns Aug. 10. One daily round-trip flight each Saturday. Seasonal.

Boise, Idaho- Chicago Midway

Returns Aug. 10. One daily round-trip flight each Saturday. Seasonal.

Newark, New Jersey-Orlando, Florida

Returns Aug. 10. One daily round-trip flight each Saturday. Seasonal.

Richmond, Virginia-Orlando, Florida

Returns Aug. 10. One daily round-trip flight each Saturday. Seasonal.


Returns Aug. 10. One daily round-trip flight each Saturday. Seasonal.

Des Moines, Iowa-Phoenix

Returns Aug. 10. One daily round-trip flight each Saturday and Sunday. Seasonal.

(Ben Mutzabaugh - USA TODAY)

Saturday, January 26, 2019

Southwest Airlines Boeing 737-8H4(WL) (36654/5273) N8660A, Delivered 2/11/2015

Holds short of Rwy 30 at Long Beach Airport (LGB/KLGB) this morning (January 26, 2019) as it readies to depart to Sacramento International Airport (SMF/KSMF) as "SWA3630."

(Photo by Michael Carter)

Saturday, January 19, 2019

Gulfstream G650(ER) (c/n 6346) N1895T

On short final to Rwy 30 at Long Beach Airport (LGB/KLGB) following a flight from the factory at Savannah-Hilton Head International Airport (SAV/KSAV) as "GLF66" arriving at 16:19 pst.

(Photos by Michael Carter)

Tuesday, January 15, 2019

Etihad to cut 50 pilot positions

Etihad Airways will cut 50 pilot positions by the end of January as it continues its turnaround efforts.

In a memo to employees, the airline's vice-president of flight operations Sulaiman Yaqoobi says the reduction in headcount follows a cut in capacity, and is part of the airline's plan for a "7 to 10% reduction in our operating cost across its network."

The memo notes that the airline has 2,065 pilots in its ranks, which is a surplus of around 160 due to the reduced flying by the airline.
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He adds that the past year was "extremely challenging", and this is expected to continue into 2019.

"However, while we posted a significant loss at the end of last year, I want to reassure you that we are on the right trajectory and are getting closer to bridging the gap between operating costs and revenue," Yagoobi says.

Etihad reported a $1.52 billion loss for 2017, which was a 22% reduction on the previous year as it started a major transformation initiative.

That saw it cut services to Perth and Edinburgh in 2018, as it changed focus to serving point-to-point markets.

The Abu Dhabi-based carrier recently cancelled orders for 10 Airbus A320neos, but has maintained an order for 26 A321neos.

(Aaron Chong - FlightGlobal News)

Thursday, January 10, 2019

American Airlines Boeing 787-9 (40654/720) N836AA

(Photo by Michael Carter)

Positive climb, gear up as this lovely lady climbs from Rwy 25R at Los Angeles International Airport (LAX/KLAX) on a gorgeous SoCal day, January 1, 2019.

Air Canada Boeing 787-9 (37179/574) C-FRTW

(Photo by Michael Carter)

Climbs from Rwy 25R at Los Angeles International Airport (LAX/KLAX) on January 1, 2019.

Air Canada Boeing 787-9 (35270/425) C-FPQB

(Photo by Michael Carter)

Arrives at Los Angeles International Airport (LAX/KLAX) on January 9, 2019 still wearing the carriers old livery.

United Airlines Boeing 777-222 (26936/2) N774UA

(Photo by Michael Carter)
 Captured on short final to Rwy 25L at Los Angeles International Airport (LAX/KLAX) on January 9, 2019.

This is the second 777-200 built, ex N7772. It took to the skies for the first time on July 15, 1994 and eventually delivered to the carrier on March 29, 1996 with the original reserved registration of N77772 NTU.

Tuesday, January 8, 2019

Airbus Finalized 2 Big A220 Orders Just Before 2018 Ended


Back in July, Airbus signed tentative deals to sell a large number of A220s to jetBlue Airways and a proposed U.S. airline start-up led by JetBlue founder David Neeleman. Yet by the end of November, those deals still hadn't been included in Airbus' official order book.

Both orders were firmed up right at the end of 2018. That will boost Airbus' A220 order backlog by more than 30% -- and an even greater percentage, if you exclude existing orders that are likely to be canceled. However, to make the A220 program a financial success, Airbus will need to build on the program's momentum and capture more orders outside of the U.S. market.

Finalizing Airbus' first two A220 deals

At the beginning of July 2018, Airbus took over management of Bombardier's struggling CSeries aircraft program and also gained a majority stake in the program. It promptly renamed the CS100 and CS300 the A220-100 and A220-300, respectively.

It didn't take long for Airbus to start landing orders for its new aircraft family. Within a few weeks of the transfer of control, jetBlue announced that it would buy 60 A220-300s, and Moxy Airways (the code name for Neeleman's start-up) also decided to acquire 60 A220-300s.

Last week, Airbus announced that both airlines had firmed up their orders in the final week of December. This adds 120 firm orders to what was a relatively thin backlog of 353 firm orders as of the end of November. It also gets Airbus to at least 600 firm orders across all of its aircraft programs for 2018 as a whole -- excluding any possible cancellations booked last month.

New capabilities for new missions

Both jetBlue and Moxy Airways executives have high hopes for the A220. jetBlue says that its A220-300s will be 29% cheaper to operate on a per-seat basis than the Embraer E190s they will replace. The A220-300s also have enough range to operate transcontinental flights -- unlike the E190s -- allowing for higher utilization. An A220-300 could even theoretically fly from Boston to Iceland, Ireland, or Scotland.

Considering all of the benefits of the A220-300, jetBlue expects its fleet replacement campaign to boost its companywide pre-tax margin by about 3 percentage points and increase its pre-tax profit by hundreds of millions of dollars annually.

Meanwhile, Neeleman believes that the A220's low operating costs and substantial range will allow Moxy to profitably serve a slew of markets that lack nonstop service today. In fact, he has said that his new start-up may not face direct competition on any of its routes. Neeleman is confident that cheap nonstop flights will allow Moxy to quickly become a force in smaller U.S. markets.

Will more sales follow?

These two sizable A220 orders are certainly nice for Airbus to have. However, in order to avoid potential legal action related to government subsidies for the CSeries/A220 program, Airbus has decided to build A220s destined for U.S. airlines at a new facility within the United States.

Between an earlier order from Delta Air Lines and these two orders, the new assembly line's capacity is almost fully booked through 2024 at a production rate of up to four aircraft per month. By contrast, the original Mirabel, Quebec, factory could theoretically build up to 120 A220s annually -- but there are barely more than 200 unfilled orders from customers outside the U.S. Thus, as things stand now, Airbus would be building A220s at low production rates in two separate facilities. That's an inefficient way of doing business.

For the A220 program to reach a respectable level of profitability, Airbus needs to achieve a production rate in Mirabel roughly in line with that factory's capacity. To do so, it would need to secure hundreds of additional firm orders from customers outside the U.S. in the next few years.

The jetBlue and Moxy orders should give potential buyers more confidence that the A220 program has a long-term future. Now Airbus needs to follow through by recruiting new A220 customers so it can fully utilize its existing production capacity in Mirabel.

(Adam Levine-Weinberg - The Motley Fool)

Tuesday, January 1, 2019

Emirates Airbus A380-861 (c/n 169) A6-EOE

Taxies to it's gate sporting the special "Expo 2020 (Opportunity / Orange) Dubai UAE" livery at Los Angeles International Airport (LAX/KLAX) this afternoon, January 1, 2019.

(Photo by Michael Carter)