Step behind the scenes with Aviation Week editors to hear about their sit downs with Guillaume Faury and David Calhoun prior to Farnborough Airshow.

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Rush Transcript

Joe Anselmo:

Welcome to Check-6 from Farnborough I'm Joe Anselmo, Aviation Week's editorial director. In the run up to this year's show, our editors sat down with the CEOs of Airbus and Boeing, and they both had some very interesting things to say.

Joining me to provide you with a behind the scenes look are some of those editors, Jens Flottau, our executive editor for commercial aviation, interviewed Airbus's Guillaume Faury at the recent Berlin Air Show. And editors Guy Norris and Sean Broderick joined me for a sit down with Boeing CEO Dave Calhoun at the company's headquarters near Washington.

Sean and Guy let's start with you guys because Calhoun made some real news in his sitdown with us. He said if Congress doesn't change the law so that the 737 MAX 10 can be certified with the common flight deck as its smaller MAX cousins, he'll shelve the aircraft. That would leave the Airbus A321neo without a competitor at the top of the narrowbody market. The MAX 10 has already attracted more than 600 orders, almost half from United Airlines. He's really playing a game of chicken with Congress. Pretty high stakes here.

Sean Broderick:

The most interesting takeaway is that we have, I won't say absolute certainty, but it's pretty clear that Boeing's intention with the 737-10 is to build it and keep the commonality with the rest of the family. And it will not, and has no plans, to develop a version with an upgraded flight crew alerting system or an ICAS as, as Boeing calls it.

A very brief bit of background, as most listeners probably know there is a law that goes into effect at the end of this year, that was put in place at the end of 2020, that gave the FAA a two-year window to certify new airplanes that do not comply with the current flight crew alerting rules. Boeing has been getting exemptions -- and Guy can correct me if I'm wrong on this -- but I believe the ICAS exemptions on the 737 date all the way back to the 737-300. They're not all the same, necessarily, exemptions. The rules have changed since the last update was in 2010, but the bottom line is that Congress wants all airplanes to be delivered now with updated systems that help pilots troubleshoot issues.

The MAX is similar to the NG before it, and the Classic before that, and the very simple way to put it is it's the equivalent, almost the equivalent of an idiot light on a car. Something lights up when there's a system that's going wrong, but it's really up to the pilot to troubleshoot and figure it out using quick reference handbooks or memory. The thinking going into the interview, at least from my standpoint, was that Boeing would at least have to consider developing the 737-10 to meet the rules because it will not be certified by the end of the year. That's sort of the other thing that's important in all this is that the added time needed to certify airplanes in general and the extra scrutiny that Boeing is getting is dragging the certification of both that airplane and the -7 out.

The same rule applies to -7, looks like it's going to be certified by the end of the year, but the -10 for a variety of reasons, not going to happen. And it appears as though that Calhoun has laid down his cards and said, ‘Look, either we get the exemption from Congress, not the FAA, or we kill the program.’

Joe Anselmo:

Guy, I know we had a lot of back and forth with [Calhoun] trying to pry out from him exactly what Boeing's position was. And then he just put it on the table. Did that surprise you?

Guy Norris:

Well you're right, Joe, he did. In fact, at the very end, it was almost between you, me and Sean, who was like, well, hang on a minute, did we get it correct that you were actually saying, ‘I will not develop this airplane if that's what happens and I'm not afraid to say that,’ and we just had to sort of double check it a couple of times, didn't we, to sort of make sure he really meant that and sure enough, he did. And I think it's also significant that here at the show, we're seeing the 737, the 10 and the 777-X in the display here. So that's a sort of another sign of how bullish they are that the industry itself will kind of push this over the line and that they're going to be confident that an airplane that's flying in development and here at Farnborough is actually going to be ready as part of their product lineup next year. A Congress be damned sort of thing.

Joe Anselmo:

Well, well, speaking of confident, he also appeared to be upbeat that the company's long problems with the 787 are nearing an end. Did you get that sense?

Guy Norris:

Yeah. I mean, Sean, maybe you want to chime in on this because you've been following it so closely, but I know that from my perspective, it seemed like, yes, he was kind of giving this very strong hints that the 787 backlog, the sort of bottleneck at deliveries, was about to be released, finally. In a couple of months, at least, we're going to start seeing deliveries resume.

I don't know if Sean's going to say something on that, but from my perspective longer term, what I was really interested in was also his comments about the freighter. We sort of said, ‘Hey, you've got this issue coming up with missions regulations on the 767. You're going to have to do something to refresh the product line. Are you going to appeal it? Are you thinking about a 787 freighter, which is long been thought of? And he sort of said, ‘Yes, all of the above.’ So it was like, whoa, that's pretty impressive.

And the reason I think that's significant, beyond it being a new freighter, is the fact that -- do you know that it's 15 years ago now that the 787 rolled out? And that's just an amazing amount of time. So if you go ahead a few years to the end of the decade, it gives Boeing a really good chance to completely do a sort of block point change on that program. Maybe re-engining I don't know. So I don't know. I thought that was an interesting thing. What about you, Sean?

Sean Broderick:

Agree on the 787. It sounds as though, I mean, they haven't delivered any airplanes in more than a year really, aside from a short spate of deliveries in early ‘20, I guess it was ‘21. I have to start doing math on this. They haven't delivered any for 18 months, and clearly the FAA is being diligent, [that’s] putting it mildly, in ensuring that Boeing has a plan to both inspect and repair every airframe. And so they're about 120 now. It sounds like they're close, but it sounds like that FAA is simply not letting Boeing to come back to anything in the future with the undelivered airplanes. They’ve still got a bunch of the delivered airplanes that may need some sort of work during scheduled maintenance or whatever. But I mean, clearly for Boeing, they need to get those deliveries going.

It sounds as though that maybe by the end of the summer, it'll finally be done, but how many times have we said that now? And to be clear, Calhoun did not say that. Calhoun is not putting deadlines on any of this. He's signaling confidence and sort of a general upbeat approach, and we are taking some of this from his cues. He's not drawing any lines in the sand with regard to anything in FAA's hands.

Joe Anselmo:

And Sean, you pressed him on that. You said that this scrutiny has gotten so rigorous, at what point does it threaten the business? Does it threaten to harm the business? And he didn't bite, did he? He was not pointing fingers.

Sean Broderick:

No, he, I mean, he made a comment about there, if you go back and review everything that's happened since the MAX are grounding, there may have been a few things that in other circumstances could have been handled differently, or might have been handled differently. But he recognizes the scrutiny that Boeing has attracted through its own missteps and also that the FAA is sort of revamping how it conducts oversight and surveillance. Some of it required by new laws, and some of it the FAA has seen is necessary. And Boeing as far from the only one that's affected, we've had stories about Gulfstream and Rolls Royce affected just by the FAA changes and then more globally. I mean, the Airbus is having some, it's safe to say they're having some unexpected timeline challenges with the [A321] XLR and that's primarily from, from EASA scrutiny.               

So it's a changing landscape, but yeah, at some point, though, you have to look at like in the 787's case, you have hundreds of airplanes out there flying with the same problems that the airplanes that are undelivered have. We realize it's a compliance issue, that's no minor thing in our world, but you have to wonder for the suppliers that are feeding that program and have absolutely no visibility on production plans.  You always have to balance the safety aspect with the business continuity aspect. Because as a Mitre report that came out not too long ago said, the only safe airplane is the one that's not in the air. So there always has to be a risk balance there. And we tried to get at that with Calhoun and to his credit he said, ‘Listen, we got to do what the regulators tell us to do, full stop. And then we can talk about doing anything else.’

Joe Anselmo:

I want to move on to Jens to talk about Airbus. But one final thing, obviously Boeing has just been getting pounded out there for not dragging its feet, but you know, not moving forward with the new airplane to blunt, Airbus's dominance of the upper end of the narrowbody market. Guy, he didn't give any ground there, did he? He said, ‘I'm going to take my time and do this, right.’

Guy Norris:

You're right, Joe. He didn't sort of really budge. But, I tell you what, he doubled down again on the model-based system engineering approach, which they've overemphasized in the last couple of months, has got to be tying both airplane development and production together, as one. And kind of like when they manage to join those two and scale them up, that's when things will be ready to go.

One thing that is interesting though, the last time he talked about it in any detail was really a couple years ago when most people really hadn't heard about MBE, but this talk was linked very much to NMA. NMA will be, that'll [was going to be] their airplane next. ‘And by the way, we don't really need a massively new engine for that. It's going to be just, it doesn't need to be a big leap.’  This time, he's saying very much the opposite. ‘It's all to do with still MBE. But yes, we do need an engine.’ And that change to me is very subtle, but it indicates quite clearly that their thinking is now going be when they do an airplane, it's going to be a single aisle. And that's why this is a bit even further down the road now.

Joe Anselmo:

And what's revolutionary about MBE, correct me if I'm wrong, is that, today if you launch a new airplane, people say it's going to be about 8-10 years to get the market. MBE should really, in theory, enable them to speed a new airplane to market much faster, correct?

Guy Norris:

Theoretically, yes. Of course. It may just in fact allow them to do it at the same time as they could have done 10 years ago before regulatory things got so much more difficult. They may be standing still in that. The other thing it may also allow them to do is see big problems coming down the track earlier. So they'd avoided issues that have say on the 787, for example, they would see that ahead of time. So, yeah. Interesting.

Joe Anselmo:

Jens, speaking of new airplanes asked Faury about new airplanes. What did he tell you?

Jens Flottau:

Well, we asked him about Boeing's strategy and whether he thought that they should come up with something new and you, well, don't ask me about Boeing's product strategy. But we insisted, and so he said, ‘I don't see how one could launch an aircraft today with conventional technologies with so many breakthroughs five years down the road. I would not do it for Airbus’. That's what he said. So I think you have to break this into a few parts here, because you need to obviously look at what is revolutionary in 2035, which is what he's referring to. There's two elements of that. One is, Airbus's ZEROe project, the big hydrogen research and development program that is supposed to lead to a aircraft hydrogen powered aircraft by 2035. And the other big project is on the engine side, led by GE and Safran, the Rise engine that could power a more conventional aircraft as well.

I'm not sure I completely buy his point about why would you do something conventional now when there's something so much better in 2035. If you look at the hydrogen aircraft that Airbus is proposing, it's surely going to be much smaller than a narrowbody today, well less than 100 seats is my guess, and up to 1,000 nautical miles. So that's not something that a narrowbody would compete with typically. And if you turn the argument around, you could still do something advanced, but conventional and not be threatened by what's coming in '35. I guess there's an element of wishful thinking there on the Airbus side, because if Boeing really goes ahead with something new, then that would have to trigger an Airbus response as well. And of course, that's the last thing Airbus wants. They want to focus on the long-term technology programs while harvesting the success of the through 320neo family to the extent possible. So it's not only just for Boeing to launch something new.

Joe Anselmo:

You know Jens, Calhoun told us that to get to net zero emissions by 2050 by Boeing's calculations, hydrogen will only be 1% of the solution -- that hydrogen is coming, but it's in the second half of the century. I was interesting that Faury seemed to acknowledge to you that hydrogen is only going to play a small role in the near term, in the solution.

Jens Flottau:

Yeah, it's interesting because having followed the discussion of the last year or two, people seem to have come to the conclusion that Boeing is the SAF company and is the hydrogen company. That's not really true. Actually, when we came into the interview, we asked him, ‘Do you want to talk about defense first or commercial?’ And he said, ‘I want to talk about hydrogen first’. It was really top of his agenda. So we talked about hydrogen, but the point he was making is that by 2050, hydrogen will be a very small part of the fuels that are available to aviation. I guess that's more or less, what's what Calhoun said too, right? I think Calhoun said 1%, Faury says a small part. But he does say that by the end of the century, it's going to be a very significant part of the aviation fuels available by then.So the difference between the two might be actually smaller than people seem to think these days.

And on the other hand, Faury made very clear, he was very, very concerned about the slow pickup of SAF, sustainable aviation fuels. He said he was desperate two years ago by watching things not happening, people not investing. But he's now amazed at the speed at which people are picking up launching projects, investing in projects and actually Airbus itself is investing now. They are together with Qantas investing into a fund in Australia that is supposed to develop soft production in the country. That's of course, part of the big, big Airbus order that Qantas placed to the other day. So, long story short, in the long term development timeline the perspectives, Boeing and Airbus may actually be closer than many people think.

Joe Anselmo:

Interesting. Well, let's talk Jens, about the immediate term. A big theme at the show is going to be the supply chain meltdown, the air framers can't get engines. We asked Calhoun about it and Calhoun said, Hey, we could produce twice as many MAXs -- they're aiming for 31 a month. He said, ‘We could produce 60 a month just based on demand, but we can't.’  And he said, ‘It's simply about the engines. It's just about the engines.’ You heard something similar from Airbus, no?

Jens Flottau:

Yeah, and I asked him  if Boeing doesn't launch a new aircraft, then of course your market share must be growing further in the narrowbody market in the next few years. And he said, ‘I'm not sure because it's a supply constrained market. We would build a lot more aircraft if we could, if we had enough engines, if you had enough cabin monuments,’ you name it. So, yeah it's a big issue. Basically he said the supply chain is behind the curve. They've fallen behind. He criticized the supply chain for not having listened to Airbus a year ago when they started to explain to them what the production plan was that they would slowly want to move to 75 in 2025, 75 aircraft per month. And no one wanted to listen. And so now that's where we are.

 

There's not enough engines. There's not enough cabin monuments, whatever. There's not enough raw materials in some areas. But he says, it's too soon to give up on production targets, the Airbus target to remind everyone is 720 commercial aircraft this year. They were slow in the first four, five months. June was better at 60. That was okay. But he says, ‘I'm going to slow down the day I see that I cannot can no longer achieve my targets, but we're far from that point.’ And he believes that engine manufacturers will pick up, will speed up. And at the end of the day, they will be okay. We'll see.

Joe Anselmo:

We're starting to run short on time, but I wanted to sort of wrap this up, first of all, by saying I admired that Calhoun had the courage to sit down with us and face the fire. He doesn't give a lot of interviews and he's been under withering criticism this year. I went back and looked before the last Farnborough, we interviewed as predecessor, Dennis Muilenburg. And our first question for Muilenburg was, ‘Is there no more boom-bust cycle in commercial aircraft?’ You couldn't get much more softball than that, right? And our first question for Calhoun this year was, ‘Boeing is $44 billion in net debt. First and second quarter earnings were full of charges. You haven't been able to deliver 787s for more than a year. And the  777X program has had repeated delays. Are these not signs of a company in disarray?’  Guy you're chuckling there, but his response was, ‘No, they're not. They're signs of a company coming back.’ He wasn't given any ground, was he?

Guy Norris:

No, he wasn't. When you say he was on message in a way that message is sort of strengthened [from] the past. So to me --  and Sean, you probably got the same message as well -- It feels like that all of these catastrophic and dangerous issues that have really bedeviled them, at least if they're not over, they can see that light at the end of the tunnel for all of it. Cause he was very confident. He wasn't just pulling the wool over our eyes. I really felt he meant it. And so I think that if you were in those board meetings and you were really seeing the inside track, you would see, yep, this should be done by, September October, I got that feeling that they could see their way through all of this.

Sean Broderick:

The key is closing some of these deals, so to speak. I mean, we have heard confidence coming out of the top office at Boeing numerous times over the last three years. And you can pick your topic. I mean, if they are indeed really close on getting the 787, and if they can deliver the MAX family as they want, if their safety arguments hold and they get their needed waivers. And if these new programs that are coming down the pike at some point are delivered on time and within performance, there's a lot of ifs, right. They know more than we do. I hope he knows more than we do. So what he sees is, he's expressing confidence.

At the same time, I guess I'll play devil's advocate and say, what option does he have? He's not going to tell everybody, ‘Oh man, it's just continual suckage and we don't see that changing.’ I mean, I don't think you keep your position very long if you do that. But it was convincing. I do agree. I walked out of the interview thinking that Boeing was in better shape than I did when I walked in. And I guess that's the message

Guy Norris:

Just one last observation from me as well, Sean, on that point, I'd just been to Boeing to spend a couple of days on pre-Farnborough briefings at that time. I'm not saying there wasn't doom and gloom, I mean, there was still that kind of uncertainty in the air, but there was definitely optimism that I had not seen there for two years. And a lot of it was backed up by very basic engineering knowhow, progress in certain areas and the plan going forward, which seemed to be executable and was not just pie in the sky. And I definitely got that feeling from those briefings. So when Dave Calhoun came up with that, I was going, this is on that message. And I think he genuinely believes it.

Sean Broderick:

Right. The head, the headlines don't capture the depth of work that's going on in any of these companies. Boeing's had their share of its share of negative headlines over the last three years. And it probably, it doesn't do justice to the work that's been going on to recover. And also that has nothing to do with the troubled programs. There is a lot of good work that's gone on throughout at Boeing. And I think that is part of the message that gets lost.

Joe Anselmo:

Okay, gentlemen, well, we could sit here and talk for another hour about all this, but we've got an air show to go to. So, thank you all for your time and for your insights. That is a wrap for this week's Check 6. Special thanks to our producer Guy Ferneyhough.  Be on the lookout this week for more Check 6 podcasts as we bring you the latest from the Farnborough show, and be sure to check out our dedicated landing page, aviationweek.com/Farnborough, that's aviationweek.com/farnborough. And one final request, if you're listening in Apple podcast and you want to support this podcast, please leave us a star or write a review. Have a great day, and thank you for your time.