Odds and Ends: 737 MAX development cost; another range boost for A330

737 MAX: We did this story last week on the development cost of the Boeing 737 MAX.

A330: Airbus is going to boost the range of the A330 to make it more closely match that of the Boeing 777 and 787, according to this story.

Fill ‘er up: Here’s a scary story about a goof in aerial refueling of a Boeing 707-based JSTARS.

Continue reading

CFM aftermarket drives Safran revenues, profits

A recent report by Bernstein Research takes an in-depth look at Safran, the French company that is the parent of Snecma, a joint venture partner with GE to form CFM International.

CFM, of course, is the sole-source engine provider on the Boeing 737 and has about half the market share on the Airbus A320 family.

In the January 17 note, Bernstein looks at the after-market engine business of Safran, which is dominated by the CFM56. There are nearly 17,000 CFM 56 engines in service today, mostly what Bernstein calls the second generation.

Bernstein’s report illustrates what we have occasionally written: the importance of after-market parts sales and MRO (maintenance, repair and overhaul) is to the engine market.

We’ve noted previously that the after-market is more important than the sale price of the engine where there is competition for a power plant.

As we’ve previously noted, it is not unknown for engine makers to deeply discount engine prices even more than the airframers discount their airplanes. In the lawsuit between Pratt & Whitney and Rolls-Royce over patent claims for the engines powering the Airbus A380, court documents revealed discounts as steep at 80% or more.

Continue reading

Norwegian Air splits order with Airbus, Boeing

In a surprise, Norwegian Air Shuttle split a large order between Airbus and Boeing for A320 and 737 families. The Airbus order is only for the NEO and 737 order is a mix of MAX and NGs.

We expected only the 737 order; we had previously reported NAS was one of the “commitments” for the MAX.

This represents the third all-Boeing customer Airbus has won for its NEO.

NEO deliveries will begin in 2016, equipped with the PW GTF. Engine selection for later deliveries remains open. The GTF enters service on NEO in 2015 and the NEO CFM Leap engine enters service a year later.

Boeing reports 2011 earnings, estimates for 2012: just 35-44 787 deliveries

Boeing reported its earnings for 2011 and its estimates for 2012, including delivery estimates for the 787–which were surprisingly low.

Boeing forecast 70-85 787/747 deliveries this year, with half (35-44) being 787s. This is will below Wall Street consensus, though David Strauss at UBS predicted 40. We find this a stunningly low number that doesn’t reflect well on either production ramp up or fixing the rework necessary for the more than three dozen 787s at Everett.

Boeing’s own Z24 production plan for this year had a production rate of 45 787s.

We are, as the Brits say, gobsmacked by this information. (Update, 0800 PST: In Q&A, McNerney says 787 deliveries affected by large number of change incorporation required.)

From the conference call:

Continue reading

Airbus, ATR big losers in Kingfisher turmoil

This is an expanded version of a story we did for Flight Global.

Airbus will be hit hard if Kingfisher Airlines of India fails. ATR has already lopped its entire order of turbo-props from its books due to Kingfisher’s financial travails.

Airbus is a wholly owned subsidiary of EADS and EADS owns half of ATR.

DVB Aviation Finance is planning to repossess two Airbus A320 family aircraft, if it hasn’t already, and some lessors are also taking back aircraft.

According to the Ascend data base, Kingfisher operates 31 A320 family with V2500 engines and 25 ATR-72-500s. It has 68 A320s and 38 ATR-72-600s on order. Kingfisher also has A330s, A350s and A380s on order and holds options for a variety of aircraft.

Continue reading

Understanding appraisers in aircraft values

There has been an active discussion in the comment section on the “Rate 35” post and the relative merits of appraisals and appraisers with respect to the Airbus A320 and Boeing 737NG.

We’ve been involved in the airline business since 1979 and from 1990, when we co-owned Commercial Aviation Report (CAR), have followed the appraisal business. Given the discussion in “comments,” we think a dedicated post is worthwhile.

CAR created the industry’s first commercial appraisal conference in 1990. ISTAT–the International Society of Transport Aircraft Traders–at that time was still largely a small, professional organization, far difference than what it is today.

CAR’s first conference brought together nearly every appraisal company then in existence in the US to compare and discuss appraisals of what was called Enhanced Equipment Trust Certificates (EETCs) and appraisals published by the firms.

Continue reading

Punching through the hysteria about closing Boeing Wichita

Mike Mecham of Aviation Week has a thorough analysis of what’s behind the decision to close Boeing Wichita.

Contrast Mike’s story with this ridiculous analysis. It’s very, very rare that we call out someone else but this one is so far off the wall that we can’t help ourselves. (It should be noted Loren Thompson was paid by Boeing to do a report about the Airbus subsidies and the tanker competition.)

George Talbot of The Mobile Press-Register weighed in with this story.

Boeing envisions third parallel line for 737 Max

Here are the stories we did for FlightGlobal on Boeing’s hitting Rate 35 for the 737.

Boeing may assemble the re-engined 737 Max in the same facility as it builds the 737 NG family of aircraft in Renton, Washington.

Beverly Wyse, 737 programme vice-president and general manager, said a potential third line for the Max would be placed in Renton with the two existing lines by relocating engine, empennage and line work staging areas positioned between Line 1 and a mezzanine that runs the length of the building.

Commercial production at Renton is split between two lines in the 4-481 building. Line 1, the wider of the two lines, would likely play host to Line 3 for the 737 Max.

Continue reading

Boeing celebrates going to “Rate 35″ on 737

Boeing celebrated the transition to producing 35 737s per month, from 31.5, at a huge employee pep rally today (Jan. 10) at its Renton (WA) plant, where the assembly is done.

With the country-rock band Chance McKinney & Crosswire blasting away, the event was festooned with blue-and-white balloons, cupcakes with blue or white frosting, green T-shirts embossed with “Boeing 737 MAX” and a sometimes cheesy, scripted cheer-leading effect from employees, the event marked not only a milestone for the 737 but for Boeing Commercial Airplanes. No aircraft has been produced in such numbers by Boeing.

And more is to come. The production rate is to increase in 2013 to 38 per months and to 42 the following year.

Beverly Wyse, VP and GM of the 737 Program, told the 10,000 Renton employees that the rate could climb to 60 per month someday.

All this means more jobs for Renton and Puget Sound (the greater Seattle area). Renton will be adding 600-700 more jobs in the each of the next two years for the NG production rate increases, Wyse says. It is too early to know how many more jobs will come with a third line for MAX, which doesn’t have a first-flight time until 2016 and an entry-into-service in 4Q13.

Meanwhile, Boeing is processing through weekly orientation days 100-200 every Friday for Puget Sound employment, says Tommy Wilson, Business Relationship guru for IAM 751 at Renton.

We did two stories on the celebration for Flightglobal. Under our agreement with Flight, we have to wait 24 hours after Flight’s publication before we can post those here.

Separately, Aspire Aviation published this long piece, looking at the 787 program and ramp up.

Odds and Ends: Air India’s cost of 787s

Air India: FlightGlobal has this article that details the cost of Boeing’s 787s to Air India.

British Airways: Two pilots on a flight from London Heathrow nearly passed out

Kansas: Gov. Sam Brownback unveiled incentives today (Jan. 9) for Bombardier to bring jobs to Wichita, which politicians will view as very positive in the wake of Boeing’s decision to close its defense operations there. Considering Brownback’s stance on Boeing and the air force tanker competition, he continues to diversify Kansas from just Boeing. Wichita is the self-proclaimed “Air Capital of the World,” with presence from Bombardier, Hawker Beechcraft and Airbus. Boeing, of course, was the anchor, having been in Kansas 80 years.

More on tankers: Flightglobal has an interesting piece that 10 years ago, Embraer was prepared to join Airbus Military in the development of the A400M.