Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
- Bjorn’s Corner: New engine development. Part 3. Propulsive efficiency April 12, 2024
- A350-1000 or 777-9? Part 2 April 11, 2024
- Pontifications: Boeing “transparency”–not so much. April 9, 2024
- Airbus charges and write-offs since 1999: more than €33bn April 8, 2024
Airbus Innovation Days, Part 4: A330neo announcement at Farnborough not a sure bet; CEO questions market forecast
- Bregier sees hundreds, not 1,100-1,200, market potential for A330neo–perhaps not enough to justify program.
- A330neo needs to match operating cost of 787-8, officials say.
- New engines will up maintenance costs.
Airbus officials say they are still evaluating whether to proceed with the A330neo, and that an announcement at the Farnborough Air Show next month is not a given.
John Leahy, COO-Customers, ticked off the considerations during the Airbus Innovation Days this week in Toulouse. These are corporate and strategic issues. A more tactical issue is what impact re-engining will have on maintenance costs, says Kiran Rao, EVP of Strategy and Marketing.
In his presentation, Rao said that the A330ceo has lower maintenance costs than the Boeing 787 (something Boeing would likely dispute), with engine maintenance costs being a notable factor.
In a sidebar press scrum after his presentation, we asked Rao about this. If the neo is equipped with either (or both) the Rolls-Royce Trent 1000 TEN or GE Aviation GEnx, or derivatives, what would the impact be on the claim of maintenance cost advantage?
Rao acknowledged this is a consideration. Using the 787’s engines, or derivatives, will narrow the maintenance cost, he said. “We’ll shoot ourselves in the foot [a bit],” he said. But the 787’s nacelles are proprietary to Boeing and the materials add dramatically to the maintenance costs. (According to our Market Intelligence, as much as $750,000 per engine is the cost of overhauling the nacelles, but this is unconfirmed.) Airbus will have to design its own nacelles for the A330neo, and according to our MI in the supply chain, it is seeking information about this.
Rao said it will be necessary to match the operating costs and fuel efficiency of the 787-8 with the neo. The lower capital costs will then give the neo a major advantage over the 788, he says.
The A330 wing is already very efficient (a conclusion reached independently by our Leeham Co EU analyst, who has an aeronautical engineering background).
“There’s not much more we can do with the wing or the winglets,” Rao said.”It doesn’t need a new wing.”
The A330 is fare more efficient than the 787 or the A350 on routes of 2-3 hours, he said, giving it a future in Asia and particularly China.
What’s the market potential for the A330neo?
At the IATA AGM, Leahy and Steven Udvar-Hazy, CEO of Air Lease Corp., said it’s 1,100-1,200. At dinner Wednesday night, Airbus CEO Fabrice Bregier was far more conservative, noting that Airbus Group CEO Tom Enders had previously said the potential was in the “hundreds.” We asked Bregier to be more specific. He replied, “between 200 and 900,” and suggested cutting this figure in half. This suggests around 400, a figure we heard that the engine OEMs projected the market.
Bregier then went on to say this wasn’t enough to launch a program.
With falling sales of the A330ceo and a production rate of 10/mo, we asked Bregier how long this rate could be sustained. He replied, “a few years,” and amplified that he thought the rate could be maintained through 2016.
Well if I say it and Bergier says it, it must be true!
400 aircraft, consider 5 million premium for the NEO, that makes 2 billion to fool around with. The A320 NEO cost 1.8 billion if I remember correctly. Always strange that adding a new pylon costs so much.
Schorsch – I suspect that the additional mass of the new engines as a percentage of the gross weight of the A32x will place strain on all the components, not only the pylons. This will mean additional testing and certification – and having to do it with 320 and 321 and two engines… that will cost. I have doubts about the 318 NEO viability.
If I cut 900 in half I get 450 and if I assume it means the mid point I get 550. Anyway…
If it is 400, when do you see this putting end of production Scott, and did anyone indicate how, if they don’t go with a NEO, this would tally with the other stated position of no all-new design for the next decade (was, decade, wsn’t it?)?
The point is that the A330 NEO wold sell for far less than the 787 offsetting those fuel burn advantages.
The A330NEO is not a A320 (x) neo. You are taking an aircraft that dates back to the late 70s technology wise (upgraded but thats its core) and trying to compete with an aircraft thats a 2000s technology.
Ergo, the comments about the wing being perfect. Really? Boeing has gone through that progression and now does without winglets as the crank wing (if designed as part of a wing from the git go) is more efficient.
Reality is the A330 could use a new wing and it would be a significant improvements, but it would dramatically add to the costs and not make the market any larger.
A320 series could have used that too, but it was competing against a 50s technology y orignal aircraft not a newer or even equal one (despite all the 737 upgrades). Note that the A320 has never had a fuselage rupture and the 737 keeps having them, they have scramble to compete and got too cute with gluing things together
So its not if its doable fuel efficiency wise, a shorter range A330NEO would match up well, its whats the overall picture? It cuts into A350 sales and those are precious right now (the Emirates loss may have affected the thinking as well). And if the sales range is more in the 200-400 then does it pay enough to divert resources?
Plane and simple, Airbus by electing to move up to split the market between the 787 and 777 has left a holes in the lineup. Boeing has it covered well though there obviously (from the the A350 sales ) an exploitable gap.
Still there is big gap below the A350 Boeing has to itself and there is the gap above it that Boeing has to itself and in both cases can charge more as there is no realistic competition (any more than there is between the 747 and the A380 which wins hands down baring other factors).
“The A330NEO is not a A320 (x) neo. You are taking an aircraft that dates back to the late 70s technology wise (upgraded but thats its core) and trying to compete with an aircraft thats a 2000s technology.”
I think the A300 and A330/340 have much of the fuselage cross section in common. Not the wing, landing gears, cockpit, systems, avionics. The A330/340 technology is a little younger then the A320s where it matters. It is similar to the 777.
Interesting that Bergier disagrees with SUH and Leahy(especially the former) on the sales potential of the A330NEO.
A few months ago I posted the idea that Airbus would try everything it could to delay A330 NEO until 2020. Why? Because all currently available engines will be too far behind GE9/RR Advance/GTF. It will make more sense to NEO the A330 and A380 together, so a TRENT based NEO will have a very limited life, but might still be worth doing IF Airbus absolutely have to to keep the line going.
I think they will wind up deferring a bit, yet again, per MartinA. If the A330NEO were able to be cheaper in capital and just as efficient as it’s competition (788 or otherwise), they’d be confident in selling much more than 300-500 copies.
Why does an overhaul of an engine nacelle cost 750K? That seems unreal.
When you compare the cost of launch of a A330 Regional versus an A330NEO: then it is a no-brainer to focus on the A330 R with it’s lower development costs given a similar size market of 400. The big twin’s economics over the narrow-bodies as well as superior turn-around with two aisles and doors makes it irresistible to constrained airport operators.
The problem with a A330NEO is that it cannibalises the A350 sales and the majority of the profits go to RR and not Airbus. The article also highlights the lower maintenance that the A330CEO has against any other wide-body out at the moment – for the same missiono f course.
I suspect that if Airbus does launch the 330NEO, it will push launch date to 2018 in order to preserve the higher margin A350’s desirability and notwithstanding the drop off of current orders. the projected orders from the Regional will compensate.