Odds and Ends: Comparing Airbus, Boeing 20-year forecasts; A320neo first flight; 787 battery probe fizzles; Mythbusting

Airbus v Boeing forecasts: The Blog by Javier takes its annual look at and comparison of the Airbus and Boeing 20-year forecasts. Airbus issued its new forecast this week; Boeing’s annual update was issued last summer.

Separately, the A320neo with Pratt & Whitney engines made its first flight today. The CFM LEAP neo is supposed to follow by six months. Showing class, Boeing Tweeted a congratulations for a milestone for the industry.

787 battery probe: The US National Transportation Safety Board hasn’t been able to find the root cause of the lithium ion battery failure in the Japan Air Lines and ANA Boeing 787 incidents. Now, the Japanese investigation has also failed to find the root cause of the ANA battery meltdown.

It’s rare but not unknown for investigators to not find root causes of problems, sometimes for years. A Northwest Airlines Boeing 747-400 split rudder hard over during a flight from Anchorage to Tokyo is one example; it took four years to determine the cause. The root cause of Boeing 737 rudder hard-overs, two of which caused fatal accidents, went unsolved for years.

Boarding airplanes: The reality show Mythbusters, an often entertaining look at myths, conventional wisdom, fact and fiction, takes a deep dive into airplane boarding. The article, with an insert to the episode, is here.

The Southwest Airlines style of boarding, with no seat assignments and derisively called cattle-call boarding, is the fastest and the most annoying, according to Mythbusters. Back-to-front is the longest. The Window-Middle-Aisle works best (but for those of us who like the aisle seat, the overhead bins are usually stuffed by then).

ISTAT Europe Conference in Istanbul: Boeing and Airbus slugging it out with some new twists

Airbus and Boeing squared off once again Monday, this time at the ISTAT Europe conference in Istanbul, once again pretty much over the entire product lines.
Boeing’s VP Marketing Randy Tinseth began with two focal points, the 737 with its latest developments and Boeing’s “superior” Twin Aisle line-up. Tinseth claimed Boeing has caught up to the A320neo with the 737 MAX.

After an A320neo head start of a year, Tinseth says Boeing has kept the same sales rate per year for the 737 MAX. The backlog of 737 MAX now stands at 2,300 aircraft and he described why Boeing thinks it is well positioned in this market segment.

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Odds and Ends: UBS on wide-bodies; CFM on GTF; Analysts on CSeries; Expedia on LCCs

UBS on wide-bodies: Investment bank UBS sees the Airbus A330ceo deliveries  dropping from the current production 10/mo to 5/mo by 2017, in advance of the introduction of the A330neo late that year. As Airbus transitions from the ceo to the neo, beginning in earnest in 2018, UBS sees deliveries dipping to just 40. The forecast doesn’t yet go beyond 2018.

Likewise, analysis David Strauss sees the Boeing 777 Classic deliveries declining from the current production rate of 8.3/mo to 5/mo by 2017, well in advance of the 2020 entry-into-service of the 777X replacement. He sees Classic deliveries holding at 60/yr in 2018.

Strauss sees 12 Boeing 747 deliveries per year beginning in 2016 through the forecast period in 2018, implying a rate reduction from 1.5/mo to 1/mo.

CFM on GTF: The head of CFM International’s technology told a conference that CFM looked at Geared Turbo Fan technology when evaluating proceeding with what became the LEAP engine and decided to take a pass.

Speaking at the Morgan Stanley conference, Reuters reports that chief technology officer Mark Little said CFM shied away from the GTF over weight and reliability concerns. But he didn’t rule out using a GTF for some future engine, according to Reuters.

Analysts on CSeries: Bloomberg reports that an increasing number of aerospace analysts and consultants believe the entry-into-service of the Bombardier CSeries will slip from 2H2015 into 2016.

We’ve previously reported that we now have the CSeries EIS slipping into 1Q2016.

Bombardier continues to press ahead for a 2H2015 EIS (which, at best, we believe is 4Q2015)

Expedia on LCCs: Airline booking company Expedia conducted a survey on Low Cost Carriers and among the results: legroom is important.

Considering the recent news items about legroom and recline wars, and Ryanair’s order for the Boeing 737 MAX 200, the survey results are worth a look.

Odds and Ends: Safran benefits from engine after-market; ExIm could back Airbus; Paine Field future

Engine After-market: Safran, which owns 50% of CFM International with GE Aviation owning the other half, is positioned in the “sweet spot” of the engine after-market, according to a recent  report by Bernstein Research.

The report further supports our own analysis posted August 25 and the growing importance of MRO support in winning engine orders.

According to Bernstein, Safran “has the best positioning in the aircraft engine after-market” in the investment bank’s coverage. This position is “driven by two engine families with strong growth ahead and low exposure to older engines that are at risk of early retirement.”

Bernstein notes that more than 95% of Safran’s after-market sales are derived from the CFM56, which powers 75% of the narrow-bodied aircraft, and the GE90, which powers the Boeing 777-200LR/LRF and 777-300ER.

Future programs include the CFM LEAP, GEnx and GP7200. Past programs, in decline, are the first generation CFM56 and the CF6 on earlier wide-bodies.

ExIm and Airbus: In a statement surely to inflame those opposed to renew ExIm Bank authority, the president of the bank said it’s possible it could back funding of the Airbus A320 family built in Mobile (AL).

Paine Field future: It’s a little parochial but The Everett Herald has an article looking at the future of Paine Field, where Boeing’s wide-body airplanes are assembled. The article necessarily looks at the future of the Boeing 747, 767 and 777 Classic production.

Congress is now talking about a nine month extension of ExIm.

 

 

 

Odds and Ends: Boeing leads net orders YTD; A320neo; ExIm Bank; Frontier Air

Airbus vs Boeing orders: Airbus reported its order tally through August and while it surpassed 1,000 gross orders, it’s net orders trail Boeing significantly. This article sums things up nicely, though it doesn’t include Boeing’s last four days of August. Boeing reports weekly and the latest report is due out today. Through August 26, Boeing trails Airbus slightly in gross orders but leads in net orders.

Update: Boeing just posted its weekly order tally: 1,004 gross orders (to Airbus’ 1,001) and 941 net orders, still well ahead of Airbus’ net orders.

A320neo first flight: Airbus will launch the first flight of the A320neo this month for the airborne test program. This is powered by the Pratt & Whitney GTF; the CFM LEAP A320neo is supposed to follow by about six months. Entry-into-service for the GTF neo is planned for October 2015.

ExIm Bank: Members of Congress are looking at a short-term extension of the ExIm Bank‘s authority (read: until after the November election).

Frontier Airlines: This carrier is rapidly converting to an Ultra Low Cost Carrier business model, a process begun several years ago and accelerated last year. Aviation Week has an article that takes a look.

Go Seahawks: The NFL season opens tonight with the 2014 Superbowl champs Seattle Seahawks hosting the Green Bay Packers. Go Hawks!

After-market support becoming key to winning engine orders

Maintenance and power-by-the-hour parts and support contracts are increasingly becoming the deciding factor in deciding which engines and which airplanes will be ordered—it’s no longer a matter of engine price or even operating costs, customers of Airbus and Boeing tell us.

Ten years ago, 30% of engine selection had power-by-the-hour (PBH) contracts attached to them. Today, 70% are connected, says one lessor that has Airbus and Boeing aircraft in its portfolio, and which has ordered new aircraft from each company.

“We’ve seen a huge move in maintenance contracts,” this lessor says.

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Odds and Ends: Boeing discounting; A380 analysis; A320neo LEAP

Boeing discounting: Although Boeing alternately acknowledges it’s under price pressure from Airbus or it’s maintaining pricing on its aircraft, UBS aerospace analyst David Strauss concludes that discounting is increasing on the 737 and 777 but is somewhat better on the 787.

Strauss writes in an August 6 note that discounting on the 737 is around 59%. The 777 is now discounted at about 54% and the 787 trails at 46%. (He doesn’t bother with the 747-8.) These are for in-production models.

Strauss concludes that 737 discounting increased since the introduction of the MAX in 2011.

Current list pricing for the 737 is $78.3m for the -700, 93.3m for the -800 and $99m for the -900. The MAX list prices are $87.7m, $106.9m and $113.3m.

The list prices for the 777 are $269.5m for the -200ER, $305m for the -200LR, $330m for the -300ER and $309.7m for the -200LRF. The -8X comes in at $360.5m and the -9X at $388.7m.

The 787-8 lists for $218.3m, the -9 for $257.1m and the -10 for $297.5m.

We are hearing, however, of special cases in which the 787-9 runs for $135m or significantly less and the 787-8 for as low as $115m. We also hear of the 777-300ER being offered for as little as $128m in special circumstances. The calculated discounts UBS mentions for 737 fall within the pricing range that we hear in the market. Strauss writes that some discounts to list reached 65%, also within the range of what we have heard.

The discounting becomes increasingly important because Airbus says it can price the A330ceo and neo sharply below the 787, up to 25% less. Boeing has far less flexibility to discount the 787 than with the 737NG and 777 Classic. The former still isn’t making money while the latter have amortized production lines–just as the A330ceo line is fully paid for. Airbus has offered the A330ceo at steeper discounts to list than Boeing offers the 787, and the forthcoming neo will also see steeper discounts than the 787–unless Boeing becomes more aggressive in that pricing, which will only increase the time to profitability.

A380 analysis: Here is a good, detailed analysis about the Airbus A380 and its position in the marketplace.

A320neo LEAP: CFM’s LEAP-1A, for the Airbus A320neo, has entered production. Aviation Week has this article with the details.

GE analysis post Farnborough

Our wrap up of Farnborough would be incomplete without looking closer at the world’s leading engine supplier, GE Aviation, which together with partners (like SAFRAN in CFM joint venture) garnered more than $36 Billion in orders and commitments during the show. This figure was only significantly bettered by Airbus ($75 Billion) and it came close to Boeing’s $40 Billion. With such level of business the claim by GE Aviation CEO, David Joyce, that the Airbus A330neo engine business was not the right thing for GE as they have more business than then they know what to do with, was certainly no case of “sour grapes”. Continue reading

Farnborough Air Show, July 17: Orders summary, reflections of the show

Orders continued to trickle in as the Farnborough Air Show winds down (there could be others not listed here).

  • Airbus: Transaero, LOI for 12 A330neos and eight A330ceos; Hong Kong Aviation Capital firms up an order for 40 A320neo and 30 A321neo aircraft, announced at the Paris Air Show last year. Here is the Airbus wrap up press release.
  • Boeing: Summarizes its performance at FAS with this press release; 201 orders and commitments.

Items of interest:

Overall reflections:

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Farnborough Air Show, July 16: Orders Summary

Here are the orders we’ve seen for today (there could be more); this should pretty well do it for the show, though it does continue through Friday and there probably will be a few more deals:

  • Airbus: Air Mauritius, MOU for four A350-900s.
  • ATR: Myanma Airways, six ATR 72-600s with options for six.
  • Boeing: After saying he was in no hurry to finalize the 777X orders, U-Turn Al (Akbar Al-Baker) did just that–Qatar Airways signed the contract for the 50 announced at the Dubai Air Show last November, with 50 options; Qatar also orders and options eight (4+4) 777Fs; Hainan Airlines, MOU for 50 737-8s; MG Aviation Limited, two 787-9s; Air Algerie, two 737-700Cs.
  • Bombardier: Nok Air converted two previously held options to firm orders for the Q400; Unidentified commitment from an existing customer for five CSeries; Unidentified order for seven CS300s and added six options; now at 513 orders and commitments.
  • CFM: 80 LEAP-1A engines (for A320neo) from Mexico’s Interjet.

Items of interest:

  • Ready for a 12 hour flight in the Bombardier Q400 turbo-prop? It will soon be available. Marshall Aerospace sent us this press release:
    Auxiliary fuel tanks for Bombardier Q400: Marshall Aerospace and Defence Group and Bombardier Aerospace are developing an External Auxiliary Fuel System solution for the Bombardier Q400 turboprop aircraft.The solution, which will be available as an official Bombardier option, will provide up to an additional 10,000lb of fuel in two external pannier tanks allowing the aircraft to fulfill a whole range of missions requiring additional range and endurance, allowing this turboprop platform to be able to sustain operations of up to 12 hours.
  • Although Airbus CEO Farbice Bregier said “no” to an A380neo, reported in The Seattle Times and linked by us earlier, today Aviation Week quotes Airbus COO-Customers John Leahy as saying a decision on the A380neo will come next year–which supports our commentary that we didn’t believe the A380neo issue is dead. Airchive reports that A350 chief Didier Evard hasn’t ruled out an A350-1100, either, just as we also noted in our commentary.
  • GE wanted to be the sole source on the A330neo, reports Aviation Week, which also explains why Airbus chose Rolls-Royce.
  • Flight Global has this story explaining how Airbus plans to be “weight neutral” for the A330neo vs the A330ceo.