Podcast: Flubs And Forecasts

Eight Aviation Week editors grade their predictions for 2024 and make new bets on what will happen next year.

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Transcript

Joe Anselmo:   

Welcome to the year-end edition of Aviation Week's Check 6 Podcast. I'm Joe Anselmo, Editorial Director and Editor-in-Chief of Aviation Week & Space Technology magazine.

And today we continue our annual tradition of asking our editors to pull out their crystal balls and predict what's ahead in the coming year. But there's an added twist this year.

Guy Ferneyhough, our podcast editor, went back and found what they predicted for 2024. We'll remind each of the editors what they said and how they did, and then ask them to pitch forward into their predictions for 2025. We've got eight editors with us today, so let's get started.

Business Editor Michael Bruno, you had said, "My prediction is 2024 is going to be the year of airing grievances in commercial aerospace. I wouldn't say it's going to derail the supply chain, but it's going to sound like the family is having some disputes." How'd you do, Michael?

Michael Bruno: 

'd give myself a C or a C plus, because there absolutely were disputes. There were plenty of little jabs at each other, whether it was people picking on Honeywell International or continuing to call out Precision Castparts, forgings, castings, things like that along the lines.

 But what I didn't see coming was Boeing buying Spirit AeroSystems, which I thought was going to be the biggest dispute, and if anything had the chance to derail what industry was working on, that was going to be it. But it looks like they're going to work it out internally, because they're all going to be one big happy family again.

So a bit of a C for myself there in the sense that I thought the disputes would be louder, but they kind of got resolved a little quicker and in a stranger way than I expected.

Joe Anselmo:             

 Jens Flottau, on to commercial aviation. I think you actually give grades with numbers, not letters, but when you gave your prediction last year, you chose to talk about airlines, and you said, "After the global financial crisis, airlines entered unprecedented profitability, then they entered a period of unprecedented losses during COVID, and now they're kind of where they were. So nothing's changed over the long period and I guess that's not very good news.” You didn't say anything about Boeing, Airbus or supply chain.

Jens Flottau:               

 Yeah, so I guess I'm kind of with Michael, C, C plus. In principle, I still think that is accurate. If you look at the profit margins, the overall profits, it's kind of where they were in the 2016, 2017 timeframe. Not great if you look at other industries. For the airline industry, okay.

What I didn't see coming is how much worse the supply chain got and how much that affected airlines. I mean, just look at the GTF engines, 700 aircraft on the ground right now. The A350 is looking like it's going to have its worst ever year for deliveries, not counting year one obviously where production is always very low. So that one is, yeah, I was clearly off and I guess I'm in good company with that, but yes, C, C plus.

Joe Anselmo:  

And going forward to 2025, what are some of your key predictions for next year, Jens?

Jens Flottau:       

Nothing will change, so it's still going to be a struggle on the supply chain side. Profit margins will be very small. Delays will continue. Costs will continue, we have to have this cost debate on the airport side. On the ATC side there will be a huge capacity shortage that airlines will struggle to deal with.

ACMI operators will have another good year, so it's more of the same. And unfortunately, probably also no news or no big news on future aircraft programs, which the industry really would need to, among others, reach its sustainability targets. I get the feeling that everyone's delaying decisions, moving things further to the right on the engine side, on the OEM side. So in that sense, '25 might be a lost year.

Joe Anselmo:     

Moving on to space and Editor Garrett Reim. Garrett, last year you said, "My prediction for 2024 is that the Elon Musk-Jeff Bezos rivalry will heat up. They say they want to launch New Glenn in August, a heavy launch rival to SpaceX’s Starship. Also, Kuiper is the Amazon broadband communications constellation. That's getting going and could be a serious rival to Starlink." And yet it really seemed that SpaceX pulled away even further this year, didn't it?

Garrett Reim:        

 Yeah, they did. Although I gave myself an A for effort. The Bezos rivalry with Musk seems to be still going, but Bezos has definitely fallen behind, Amazon and Blue Origin.

The space industry's perpetually delayed and it should have been more predictable that they were not going to launch on time. But they do have some deadlines with the FCC to get some Kuiper satellites launched, so there's some pressure growing on Bezos to catch up. Yeah, sort of half true. The rivalry still goes strong. It's got a new fold now with how deeply embedded Musk is within the Trump administration and, yeah, we'll see what happens going forward.

Joe Anselmo:  

So pitch us forward, Garrett, what are some of your key predictions for 2025?

Garrett Reim: 

Looking at Advanced Air Mobility, it seems like 2025 is going to be the year of truth or the year of reality hitting. There's Joby and Archer trying to get FAA certification. What real progress they make towards that will maybe get a little bit exposed this year, and then how will the markets react? These are both publicly traded companies and are they going to need more funding to keep going and testing and so on and so forth?

And then I think you'll see just a ton more announcements around AI and greater use of software in trying to improve engineering processes within various companies. And there's a growing realization that a lot of time is wasted not on engineering, but on the paperwork and the tedious stuff that's not actually product creation.

Joe Anselmo:            

Okay, thank you. Moving on to propulsion and Guy Norris. Guy, for the better part of the last year, you reminded me that you went last last year, so we're going to bring you in earlier this time.

You had said, "I think in 2024, one of the things that might emerge is a new partnership on a new family of Rolls-Royce UltraFans to take on the might of CFM with the RISE Program, possibly involving non-traditional players. The old world of propulsion that we've seen for the last 70 years is under some sort of change."

Guy Norris:           

Right. Yes. Thanks, Joe. And first of all, can I just say I didn't realize you were going to hold us to these predictions and publicly embarrass us by making us see how badly we did, but anyway, that's the way we go.

 So yes, I think I might've jumped the gun in that case quite significantly. But I still think underneath it all, something's moving in that direction. And I did say that things as we know it are changing in the engine business, and that did sort of start to happen with the development of the Symphony engine consortium for Boom for example.

So there are a couple of things that I got right, but basically I am not very good at forecasting, and that just proved it. But I'm hoping that one day there it will be the emergence of something like a new consortium to challenge the RISE. I mean, why not?

Joe Anselmo:          

Okay. And so pitch us ahead. Try again, Guy. What do you think some highlights will be for 2025?

Guy Norris:       

 The weird thing is, is that in the old days, well, in the old days, the past sort of 20 years at least, one of the areas that there really has not been much in the way of is in faster than sound travel, supersonics, hypersonics.

And now it's perhaps a safer area to forecast than the subsonic market, certainly in terms of new developments. And that's where I think we're going to see a lot of activity in '25.

 I'd mentioned Boom briefly there. They of course will be hoping to go very soon in the early new year to Mack 1-plus and they're testing the XB-1, which should sort of at least help their sort of fundraising side as they continue to do the development of the airliner, the Overture.

 And then looking at other areas of course, out in the desert up at Edwards Air Force Base, we'll have Hermeus with the Quarterhorse paving the way for their stepwise program to develop hypersonic technology.

And we're going to see a lot of areas of high-speed research continuing to bear fruit in things like rotating detonation. These are all air breathing concepts. So I think we're going to see Venus Aerospace, for example, continue to do pretty impressive things with their concept. So yeah, I think high-speed propulsion will be another area to watch. So that's my safe prediction for '25 for you.

Joe Anselmo:  

Okay, Guy, we'll definitely come back next year, see how you did.

Moving on to defense, unfortunately, Steve Trimble, our defense editor, could not be here, but his boss, Robert Wall, who just joined Aviation Week this year, rejoined, is standing in for Steve.

So Robert, Steve's prediction was, “The biggest program that's going to get decided will be the US Air Force's Next Generation Air Dominance. I'm not going to pick a winner. We know so little about this program that any prediction is a wild guess.” So how'd Steve do?

Robert Wall:

Yeah, well, since it's review time, it's actually really good to reflect on these things. But so how did Steve do? Well, he did arguably very well and arguably very poorly, because of course NGAD was not decided. So in that respect, he did really well. He couldn't pick a winner, and neither could the Air Force.

So I don't want to give him a full failing grade. I think he pointed to the big story of the year for sure. I mean, the NGAD drama has been playing out now really for the last six months, so we had all this tension and excitement building around the downslide, which then didn't happen and didn't happen. And then the Air Force said it was having second thoughts about the program. Now they've basically said, “We're going to punt it to the next administration.”

So I do think Steve clearly identified what was the big theme in the defense industrial landscape here. He just got it a bit wrong, not as wrong as Guy did with his prediction, but a bit wrong.

Joe Anselmo:           

 So how about Robert Wall's prediction for 2025? What are your predictions?

Robert Wall:           

Well, I could have set the bar really low and say Anduril and General Atomics will fly their CCAs for the end of the Air Force program, but I admit that is a bit lame.

So with the Reagan Forum here only just a few days ago, there was the suggestion made that maybe NGAD and FAAXX should merge. And I guess one prediction I'll make is that ain't going to happen. I'm not sure if one or both of the programs there will survive, but I don't think anyone has appetite for another merge program a la F-35. So I'll leave those two with you and I'll let Steve mock me at the end of next year.

Joe Anselmo:       

Thank you, Robert. Lee Ann Shay, moving on to MRO. You had predicted a year ago, quote, "The aircraft maintenance market is still really fragmented. I think it's ripe for further investment and further consolidation. The big are going to get bigger."

Lee Ann Shay:      

 So I would give myself an A minus, because there was consolidation, and Lufthansa Technik said that I had predicted they would announce a new European facility. They didn't do that until December 9th, so I would've gotten downgraded if they wouldn't have eked that announcement out at the end of the year, so I kind of got saved by there, otherwise I'd be in the B category. But I think I did pretty well.

 The market still is tight. And so going forward, I think 2025 is going to be the year of the engine. Everything's kind of going to be about the engine. Safran is expecting CFM56 shop visits to peak in 2025. 2,300 engine inductions. That's a lot of engines right there.

But then you take the CFM LEAP, and in between just overhauls and shop visits, you've got another 2,000 inductions. Now on top of that, you still have the Pratt & Whitney geared turbofan performance issues, groundings of about 350 aircraft at any one time.

And then you add on to the aircraft OEM still struggling with the delivery targets, so you've got older engines continuing to power those mature aircraft. So some of those are going to have to be going in for another shop and another overhaul, things that wouldn't have never been predicted several years ago.

So this is all leading to greater engine module swaps, PMA usage and new serviceable material. Those things have been happening the last few years, but I think next year that's going to be even higher.

And I agree with Garrett. He mentioned artificial intelligence. We've seen a lot of applications coming out being introduced for the aftermarket in this year, and that's just going to keep continuing, and as well as digitalization. I think MROs who have not been working on digitalization efforts are probably going to slip by a little bit in 2025.

Joe Anselmo:                T

hanks, Lee Ann. Moving on to Graham Warwick. Graham, if anyone at Aviation Week knows everything about everything, it's you.

 Last year you chose to talk about AAM, Advanced Air Mobility, and you said, quote, "My prediction for 2024 is that it is not going to go the way people want it to. There will be folks that don't stay on their certification tracks and don't meet their deadlines. There are probably some folks in Advanced Air Mobility that will have some serious funding issues during 2024." I think you did pretty well there.

Graham Warwick:       

  Is there a letter higher than A? Because I think I got it. Mind you, that was an easy target to aim for, right? So. Everybody else was going for much harder targets than I was going for.

So yeah, so that's what happened. Everybody moved their certification targets back. We had one failure, which is not eVTOL, but was in the hydrogen propulsion. Universal Hydrogen closed its doors. Lilium went into insolvency and is now operating in self-administration while it tries to find either a buyer or some funding from somewhere.

Vertical Aerospace in the UK kind of pulled itself out of immediate problems, but it's still a long way from having the money it needs to get to a certified airplane, so. And there's some issues around Volocopter who was one of the early leaders in this industry, and they are still trying to close a financing deal that will keep them afloat.

Meanwhile, Garrett mentioned them, Joby and Archer are the market leaders by and large, and they have had great success in continuing to bring in money. I mean, Joby brought in $500 million just from Toyota, its major external shareholder. And Archer just brought in another $400 million-plus by creating a defense division basically that will take its eVTOL technology and apply it to the military market with the ever-present Anduril as its partner.

 So no significant progress through the year, some failures, some standouts. So you're going to ask me what's going to come next?

Joe Anselmo:       

 Indeed.

Graham Warwick:    

So I'm going to go further than Garrett said. Other than we don't know what's going to happen with Volocopter. If Volocopter gets money and stays afloat, they may certify in Europe in 2025. So I'll give that caveat.

 In the U.S., nobody's going to certify in 2025. They will miss their deadlines. They might make it in 2026, which means they might launch service in 2026 if they certify early enough in the year, but I don't think they'll launch service in 2026. I think it's 2027 before we see service in the US.

And that's kind of the timescale this thing should have been right from the beginning. The original timescales these companies put out were unattainable. And what they've done is they've started fast and then they've slowed down to exactly the same pace as the rest of the aerospace industry. And that's what certification does to you.

So a lot of people have mentioned AI. We are on track to get the first in-cockpit applications of AI certified in 2025. And that's for situational awareness basically, pilot assistance, situational awareness. So that's going to be a big step when we get those first ones certified. But again, it might not happen, but I kind of think that it will at some point during 2025.

I don't think we're going to see much progress on the hydrogen side, because we're in that doing the hard work of certification, we don't expect any certification progress until 2026. But the players that are still in the running are reasonably well-funded and have a chance of getting through this year ahead of us.

And I think Lee Ann mentioned, again, going back to AI, Lee Ann's mentioned how much it's turning up in MRO, we are beginning to see some fairly significant announcements around the use of AI in the design space, from the conceptual through the early stages of design and beginning to push all the way through into the latter stages, the optimization of the manufacturing and all that sort of thing. So I think that's only going to pick up pace.

And it's been very hard to write about AI up until now because we haven't had concrete applications, other than the big data processing type of thing that folks do, to really look at aerospace and say, "How does AI actually apply to aerospace?" We are beginning to see some concrete applications.

Now, nowhere near certifying any of those applications yet, because we have not yet got to grips with certifying machine learning and all of the unpredictability that can be built into that somewhat not transparent process of how it comes up with its answer. But we're going to see folks get to grips with that through 2025.

Is my result as stark as I said last year? No, it's not as stark, but we are not going to have the progress that people even today think we're going to have. It's going to continue to be a push to get things through.

Joe Anselmo:  

Thank you, Graham. And here to take us to the finish line today is Molly McMillin who is here to talk about business aviation.

And Molly, you had a year ago said, "Something to watch in 2024 will be whether orders weaken. Will those who entered the industry during the COVID pandemic remain in it for the long term?" And prediction number two, "Supply chain challenges will continue." That was the understatement of the year, wasn't it?

Molly McMillin:          

It was. I guess I was kind of easy on myself because those were pretty easy to predict probably. Did new entrants stay in business aviation? The answer seems to be yes, for the most part. All the OEMs said that during COVID, the number of people that got into business aviation for the first time was at record levels.

 As an example, Embraer said up to 40% of all their new buyers were new owners of business aircraft. And that's compared to normally it's 9-12%. Of that, only 8% got rid of their airplanes since then. And of those, the majority were buying a different aircraft. So I would guess resoundingly, except for some here and there, the answer is yes.

The charter market, some people have left the charter market but moved on to fractional or ownership, and some have gone back to the airlines, but I think everyone is still seeing all boats were lifted during COVID.

So as far as orders, they seem like they have gotten to more a sustained level, although OEMs are still saying that their demand is continuing. So I expect that to continue in 2025. The Citation Ascend, the Beechcraft Denali and the Global 8000, they are supposed to be certified in 2025, and I think they will.

One thing to watch is there are new leaders in government, both in the US and in Europe, and along with that, a new administration, a new commission. And business aviation leaders are planning and in the midst of going to educate those new leaders on business aviation to make sure that the policies are favorable for that industry.

Some things that I think will happen, well, possibly, the return of 100% bonus depreciation, which had run out. That always gives a boost to sales. Maybe a reevaluation of targeted IRS audits on business aviation owners.

It'll depend on tariffs. If the tariffs take place, that might mitigate the business aviation, it may affect the engines, as a lot of them come from Canada. So that kind of remains to be seen. And of course, the easy prediction, labor and supply challenges to continue into 2025.

Joe Anselmo:           

And on that note, we have a wrap for this podcast and for our Check 6 podcasts of 2024. Thanks to all of you for providing and sharing your insights.

Thanks to our listeners for listening to us all year. We really enjoy doing Check 6, and sometimes it's quite a bit of fun.

A special thanks to our podcast editor in London, Guy Ferneyhough, whose idea was to dredge up last year's predictions and put all of you on the carpet. If you're mad about it, please see Guy.

 And finally, if you're listening to us in Apple Podcasts and want to support this podcast, please leave us a star rating or write a review. Better yet, share this episode with a friend or a colleague. We'll see you again in January. Have a safe and happy holiday season.

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