Category Archives: Embraer

Feb 25 2014

The case for an NSA in 2025 — successor to 737-8 MAX — (continued)

 Editor’s Note: Given the amount of interest in the prospect of replacements for the single-aisle airplanes, including the Boeing 757, our Guest Columnist provided a follow-up think piece.

By James Krebs

With the reengined Boeing 737 MAX and Airbus A320 neo families selling like gangbusters, it may seem premature, before one even flies, to be considering a New Small Airplane (NSA) successor to enter service beginning in 2025. But I’m convinced the NSA will come before conventional wisdom expects. The marketplace will demand them.

A combination of market forces could make a compelling case for a NSA in service in 2025.

-   Continuing high fuel prices

-   Increasing urgency to reduce aviation carbon emissions

-   Availability of technology for 20% fuel savings vs 737-8 max and A320 neo (at same seat number) at acceptable risk

-   Traffic growth calling for more seats for 2025 and beyond.

-   Growing pressure from the airlines later in this decade for cleaner, more economical short haul NSA’s

-   Huge global market potential for NSA families — with their performance improved through the years

-   A short haul market share by 2017-18 (neo’s and MAX in service) very disappointing to Boeing.

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Feb 21 2014

Odds and Ends: Boeing’s bonus to Charleston workers; E-Jet E2 EIS; IAM and Airbus; Fending off A330neo

Boeing’s bonus to Charleston workers: We’ve ignored the continuing workmanship stories of Boeing’s Charleston plant on the 787 for the past months as Norwegian Air Shuttle, LOT and Air India continue to have problems with the airplane. We figured there has been more than enough written about the program difficulties, so we moved on.

But the stories that Boeing is offering bonuses to Charleston workers to get the job right is something we feel compelled to comment on. The Seattle Times has this story.

It’s a bit of wonderment that Boeing finds it necessary to incentivize workers to do their jobs correctly, providing a bonus that is greater than those given to the Everett workers who have to fix the poor workmanship of Charleston. Typically, bonuses are given to workers for going above-and-beyond, not for merely doing what they are supposed to do in the first place.

The continuing issues with Charleston are waved away as “things are going according to plan,” and “traveled work is expected.” If this is “according to plan,” then the planner should be canned. Of course, we know this is merely corporate rhetoric dodging the question and strains credibility.

And back at Everett, those early 787s, known as the “Terrible Teens,” are still problem children, according to this report on public radio station KUOW.

EMB E2 timeline: Embraer has clarified its entry-into-service for the E-Jet E2. Flight Global reports that an official said the E-195 E2′s EIS will be the first half of 2018 (which was previously specified) and the E-190 E2 and E-175 E2 will follow in the first half of 2019 and 2020 respectively. Previously, EMB hadn’t been this specific about the EIS of the sibling models, saying only EIS would be in 2019 and 2020.

Union attempt at Airbus: To absolutely no surprise, the International Association of Machinists will attempt to unionize the new Airbus Mobile (AL) plant, reports The Street. IAM will also attempt to re-organize Boeing’s Charleston plant, which was once an IAM shop but de-certified in advance of the second 787 assembly line being located there. The Charleston Post and Courier has this story about the union plans there.

Conspiracy theorists in the IAM 751 suggested a quid-pro-quo between the International IAM: Boeing neutrality of re-organizing Charleston in exchange for the 777X contract vote.

Fending off A330neo: Aspire Aviation has a long piece about the prospective Airbus A330neo and how Boeing can fend off this potential competition.

Icing Up: This isn’t aviation (unless you consider this a satellite photo), but we are just fascinated by this picture of the Great Lakes in the US Midwest. The Great Lakes are 80% iced over.

Feb 18 2014

Odds and Ends: LEAP vs GTF; CSeries flight testing; MRJ FAL

LEAP vs GTF: Reuters has a story looking at the intense competition between CFM and Pratt & Whitney for the market dominance of the LEAP vs Geared Turbo Fan engines.

The only airplane where there is competition is on the Airbus A320neo family; CFM is exclusive on the Boeing 737 MAX and COMAC C919 and PW is exclusive on the Bombardier CSeries, Embraer E-Jet E2 and Mitsubishi MRJ. PW shares the platform of the Irkut MC-21 with a Russian engine. PW says it has sold more than 5,000 GTFs across the platforms. CFM has sold more than 6,000 across the three models it powers.

On the A320neo family, the competition is 50-50 at this point, with a large number of customers yet to decide on an engine choice. However, 60 A320neos (120 engines) ordered by lessor GECAS never were in contested (GECAS buys exclusively from CFM) and 80 A319/320neos from Republic Airways Holdings (160 engines) were part of a financial rescue package for then-ailing Frontier Airlines.

PW’s joint venture partner, International Aero Engines, shares the A320ceo family platform with CFM. Late to the market, IAE caught up to CFM in recent years.

On platforms where they compete, the sales figures so far show a neck-and-neck competition between CFM and PW.

Update, 12:30: The link has been fixed. Update, 9:30 am PST: Flight Global has this story reporting that PW plans a Performance Improvement Package on the GTF that will further cut fuel consumption by 3%.

CSeries flight testing: Bombardier’s CSeries flight testing has been slow to this point, but it’s beginning to ramp up. Aviation Week reports that FTV 3 should be in the air by the end of this month and FTV 4 should follow in April. FTV 3 is the avionics airplane and FTV 4 focuses on GTF engine testing.

Mitsubishi MRJ: Aviation Week also reports that the Mitsubishi MRJ airplane #1 is nearing final assembly.

Feb 13 2014

Odds and Ends: A350 state loan; Bridging 777 Classic sales; Embraer nabs E2 order; IAM chief speaks out

A350 Loan: The Wall Street Journal reports that Airbus and Germany ended talks about a state loan for the A350 program. Good. Airbus doesn’t need the loan and “divorcing” from state aid frees Airbus to make decisions for the production based on commercial considerations and not politically-driven jobs requirements.

Airbus is considering a second A350 production line to open up slots for the -1000 model. Germany made no secret that this line had to be in Hamburg in exchange for the loan. Our Market Intelligence indicates Airbus may want to locate the line outside Germany and perhaps outside Europe. Ridding itself of continue German meddling is a good thing for Airbus; now it “only” has the unions to deal with.

  • In a Guest Column in Aviation Week, Richard Aboulafia continues his A380-bashing, but what he has to say about challenges facing Airbus in the twin-aisle, heart-of-the-market sector bears reading.

Bridging 777s: Jon Ostrower at The Wall Street Journal published this story today about Boeing’s plans to support the 777 Classic sales in advance of the 777X. He reports that Boeing will try to pair 777 Classic orders with the 777X (something we forecast months ago). Boeing is also going to launch a 777 P2F program, persuading airlines to sell their older 777s to cargo carriers and replace them with new 777 Classic orders. This is a challenge because of the continuing softness in the cargo market and plenty of 747-400s available for conversion and 747-400Fs parked in the desert. Such a plan will make it increasingly difficult to support sales of the new-build 747-8F as well.

Although Boeing said it won’t shave the price on the 777 Classic to stimulate sales, we think it will (as it has on the 737 NG).

Embraer nabs E2 customer: Embraer today announced it won an order from an Indian airline for 50 E190 E2s and 50 E195 E2s with options for 50 each. The airline, Air Costa, is a current E1 customer. This is the first E2 order since the launch of the program at the Paris Air Show last June.

Reuters has an article from the Singapore Air Show quoting the Air Costa CEO. The article takes a look at the “small” aircraft market.

IAM chief speaks out: The president of the International Association of Machinists, Tom Buffenbarger, called the Puget Sound Business Journal to talk about the controversial Boeing 777X contract vote.

Why would Buffenbarger do this? He’s facing his first contested election since 1961 and his opponent is from IAM District 751 right here in Seattle. The article makes fascinating reading.

MC-21 profile: A Russian newspaper provides a profile of the Irkut MC-21 (or MS-21 or Yak-242). Talk about confused branding.

Feb 3 2014

Filling the production gap at three OEMs

HawksWinHawksWinHawksWin!!!

Airbus, Boeing and Embraer face production gaps of several years in three key product lines. Two of these, Boeing and Embraer, relate to transitions from current generation airplanes to new derivatives. Airbus faces a large gap for its ambition to continue one popular airliner well into the 2020 decade.

Airbus wants to continue production of the A330 at least to 2022 and perhaps later. Boeing last year launched the 777X to succeed the 777 Classic. Embraer also launched a new derivative, the E-Jet E2, to succeed the E-Jet E1. Based on current production rates, the OEMs’ current backlogs produce the following picture:

Airplane

Backlog

At 12/31/13

Production

Rate Today

Per Month

Current Backlog Ends

EIS of New

Airplane

Production

Gap

A330

267

10

May 2016

2022*

6 yrs

777 Classic

314

8.3

Feb 2017

2020**

3 ½ yrs

E-Jet E1

279

8

Nov 2016

1H2018

1 ¼-1 ½ yrs

* Publicly identified continued production goal

** Boeing says 2020;we assume 1H2020; Market Intelligence indicates Boeing would like to achieve a 2019 EIS.

Leeham Co. Chart. Sources: OEMs.

The key, and obvious, question is what do the three OEMs do to bridge this production gap.

 Embraer arguably is in the best shape. EMB’s chief executive officer told Bloomberg News last week that he sees about 150 E-Jet orders through 2015—but the news report didn’t specify how many might be today’s E-Jet E1 or the re-engined, next generation E-Jet E2. If these 150 turn out to be the E1, the production gap is basically filled. If these 150 are a mix of E1s and E2s, EMB could still have challenges. EMB could, like Airbus and Boeing, combine current and next generation deals into one.

 EMB officials have also gone on record that they won’t cut prices to spur sales of the E1. What else can they say publicly? They are certainly not going to say they’re open to bidding wars, and we’re not at all convinced there isn’t sharp discounting in EMB’s future. Bombardier has famously refused to offer discounts demanded by potential customers and mediocre CSeries sales reflect this. Boeing and Airbus claimed they would maintain pricing on the 737NG and A320ceo families in advance of the re-engined derivatives, but both complained about price cutting by the Other Guy and our Market Intelligence certainly tells us each has engaged in sharp, sharp discounting against each other (and in Airbus’ case, against Bombardier’s Cseries).

 We fully expect Boeing to offer discounted package deals to customers to sell the 777 Classic with the 777X and Airbus certainly expects Boeing will cut the price of the 777 Classic to close the production gap.

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Click this link: Airlines beginning to push for discounts on 777 Classic.

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 Airbus has the greatest challenge: currently a six year gap between today’s backlog and the previously stated goal to maintain production to at least 2022. Airbus has been more successful with the A330 than officials ever expected (helped in no small measure by the 787 program debacle). With a production line long-since paid off (which is also true for the 777 Classic), Airbus has a lot of pricing flexibility (as does Boeing). But while Boeing has a successor product for the Classic, Airbus positions the A330 as a complementary airplane to the A350, not a successor. The launch last year of the A330 Regional is an effort to refresh the line and add sales, but so far none has been announced. Proceeding with an A330neo would breath new life into the program, probably adding 10-15 years to production.

 Another way to bridge the production gap is to reduce rates and spread out delivery dates. But this repositions cash flows and profits, and it’s something we don’t think the OEMs will want to do.

 We think price discounting, as with the 737NG and A320ceo, will be the more likely solution.

 

Jan 24 2014

Odds and Ends: A350-800 stretch; Mixed results on P-8A; BBD takes hit; Hot seat

A350-800 Stretch: The idea of an A350-800 stretch, to around 300 seats, was floated at the Airbus annual press conference January 13. This doesn’t make a lot of sense to us. This would put the airplane almost on a par with the A350-900  at 316 seats. Typically the seating differences between minor model variants range from 10% to 15% to 20%–not a mere 5% as would be the case with the suggested 800-to-900. The operating results would be the following, according to Leeham Co EU’s analysis:

  • On  6,000nm trip, ie a 12.5 hour flight the fuel burns would be:
  • - 900, 65.4t      datum    2.33l per seat and 100km
  • - 800l 63.9t       97.7%  2.44l
  • - 800  62.4t       95.4%  2.53l

The -800 would have slightly lower trip costs but per-seat costs would be somewhat higher.

Mixed results: Bloomberg News reports mixed operational results for Boeing’s P-8A Poseidon, the replacement for the 1950s-era Lockheed P-3 Orion sub-hunter and surveillance airplane.

Bombardier takes hit: Bombardier takes a harsh hit in this column in the Toronto Globe and Mail, coming on the heels of 1,700 layoffs.’s CEO gave this interview to Bloomberg News.

Hot seat: Runway Girl Network reports that magnesium might be used for airplane seats. Let’s hope the plane is evacuated in the mandatory 90 seconds in an emergency and fire.

Embraer forecast: Embraer sees 150 orders through 2015 for its E-Jets, according to this Bloomberg News report. EMB needs the orders, if they include the E-Jet E1; there is a production gap between the E1 and E2. Boeing has a gap for its 777 Classic to 777X and Airbus has one between its current A330 orders and expectations that it will continue production into the 2020 decade.

Jan 20 2014

Odds and Ends: CSeries timeline; KC-46A roll-out; China’s new airplane

CSeries timeline: Bombardier last week announced a third delay in the CSeries program, this time for as much as a year.

This probably should have been expected. BBD originally planned a five year period between program launch and entry-into-service. As we saw with the Boeing 787, launched with a four year timeline, even five years was too ambitious.

CSeries Timelines. Leeham Co Chart

CSeries Timeline. Leeham Co Chart

The EIS period for the 787 turned out to be the standard seven years, almost eight–and even then, the EIS was anything but smooth.

Airbus’ launch-to-EIS for the final A350 version is somewhat more than eight years. Even though BBD is a sub-contractor on the 787 program and said it benefited from lessons learned, it’s clear officials were far too ambitious.

KC-46A roll-out: Boeing’s first tanker for the USAF based on the 767-200ER will roll out this summer. The Everett Herald has this story. The airplane is a somewhat revised 767-200ER called the 767-2C. In addition to upgrades with the airframe, the Pratt & Whitney PW4000 engines will have upgrades which improve fuel consumption.

China’s new airplane: China isn’t just developing the ARJ21, C919 and some military airplanes. It’s also developing the world’s largest amphibian.

Jan 19 2014

Boeing notified supply chain: prepare for 52 737s per month

Boeing has notified is supply chain that demand for the 737 is sufficient to support a rate increase to 52 a month by the end of the decade.

In a letter dated January 3, Kent Fisher, vice president of supplier management, set the date for going to 47/mo in July 2017. The year had previously been announced by Boeing. Fisher continued that demand is “sufficient” to take the “protection rate” to 52/mo “later in the decade.”

Production Rates to 2020

“Protection rate” means the Boeing and the suppliers need to protect the ability to increase to the desired rate in terms of tooling, machinery, parts, and their own suppliers. This notification isn’t as firm as announcing an actual production rate increase, but it’s pretty close.

Airbus, meanwhile, continues with construction of its Mobile (AL) plant, with a target operational date of next year. Initial production will be 2/mo, ramping up to 4/mo. The plant has the capacity of 8/mo. This means Airbus increases production of the A320 family to 44 in late 2015 or early 2016, then 46 later in 2016 and 48 to 50 thereafter.

The Airbus and Boeing production rates dwarf those of Bombardier, which is challenging the Big Two OEMs at the lower end of the 100-220 seat sector with the 110-145 seat CSeries, and Embraer, which produces the 100-122 seat E-190/195 E1 today and which is offering the 132 seat E-195 E2 for delivery beginning in 2018.

Airbus’ factories are in Hamburg, Toulouse, Tianjin and from next year, Mobile. Hamburg and Toulouse are currently producing 38 A320 family members a month, weighted toward the latter, and Tianjin is at 4/mo. Tianjin and Mobile have the capacity of 8/mo each; we don’t know the total capacity of the Hamburg and Toulouse plants but are told these are at capacity; Airbus declined comment. This means Airbus has the capacity to go to 54 A320s/mo among the four plants after Mobile is fully operational.

Boeing has the capacity for 63 737s a month at its single Renton (WA) factory. Embraer has the capacity for 17 E-Jets a month. Bombardier plans a capacity of 20/mo for the CSeries.

Jan 13 2014

Embraer continues and refines its strategy at the low-end of 100-149 seat sector

While Airbus and Boeing slug it out in the competition for the duopoly and Bombardier struggles to gain respect as an emerging mainline jetliner producer, Embraer continues and refines its strategy in the smaller-end of the jet market with its E-Jets, E-Jet “Plus” (our term) and the E-Jet E-2.

Source: Embraer, Reprinted with permission.

Source: Embraer, Reprinted with permission.

Embraer is broadening its offering from a maximum of 122 seats to a maximum of 132 and dropping its low-end E-170 from future variants. This brings the EMB family to 90-132 seats, following the decision to undertake an extreme makeover of the current E-175/190/195 line by adapting the Pratt & Whitney P1000 Geared Turbo Fan engine to a new wing design and upgrading a variety of systems in the E-Jet E2.

New Features

 Source: Embraer. Reprinted with permission.

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Jan 12 2014

Looking ahead to 2014

Here’s what to look for in 2014 in commercial aviation.

Airbus

A350 XWB: The high-profile A350 XWB program continues flight testing this year. Entry-into-service has been a sliding target. The program is running about 18 months behind original plan and EIS was intended for mid-year following initial delays. Even this has slipped, first to September and then to “the fourth quarter.” Currently first delivery is scheduled in October to launch customer Qatar Airways, which is slated to get four A350-900s this year. Emirates Airlines is listed as getting two of the total of six scheduled for delivery.

A320neo: Lost in the shadow of the A350 program is the A320neo. Final assembly of the first aircraft is to begin in the spring and first flight, followed by testing, is scheduled for this fall. The Pratt & Whitney Geared Turbo Fan is the initial variant. First delivery is scheduled in the fall of 2015.

Others: Airbus continues to evaluate whether to proceed with developing an A330neo. Based on our Market Intelligence, we expect a decision to proceed will come this year. Concurrently with this, we expect most if not all of the remaining 61 orders for the A350-800 to be upgraded to the A350-900 and the -800 program to be officially rescheduled if not dropped. The -800 is currently supposed to enter service in 2016, followed by the A350-1000 in 2017. But recall that as delays mounted on the A350-900, Airbus shifted engineers to the -900 and the -1000 at the expense of the -800. Salesmen have consistently shifted orders from the -800 to the larger models. We long ago anticipated the -800’s EIS would be rescheduled to 2018, following the -1000. The -800’s economics aren’t compelling enough just justify the expensive list price. So we expect Airbus to upgrade the A330 to a new engine option, using either or both of the Trent 1000 TEN and GEnx with PIPs (Performance Improvement Packages) or with some modifications. EIS would be about 2018. This precludes Pratt & Whitney from offering a large version of the Geared Turbo Fan, which wouldn’t be ready by then.

We also expect Airbus and the engine makers to look at re-engining the A380, driven by desires of Emirates Airlines to see a 10% economic improvement. Emirates announced an order for 50 A380s at the Dubai Air Show but instead of ordering the incumbent engine from Engine Alliance for these, Emirates left the engine choice open. This leaves open the possibility the A330neo and the “A380RE” could share an engine choice.

Boeing

After many years of turmoil, 2014 should be quiet for Boeing (now that the IAM issues have been resolved—see below).

787: Barring any untoward and unexpected issues, Boeing seems at long last to be on an upward trajectory with this program—but we’ve said this before. There are still nagging dispatch and fleet reliability issues on the 787-8 fleet to resolve, but flight testing of the 787-9 appears to be going well. Certification and first delivery should come without trouble this year, to launch customer Air New Zealand.

737: Nothing to report on the Next Generation program except ramp-up to a production rate of 42/mo is to take effect this year. Development continues on the 737 MAX.

Others: The 777 Classic is humming along. Now that the 777X is launched, we’ll be closely watching sales for the Classic; Boeing has a three year backlog but six years to 777X’s EIS. How is Boeing going to fill this gap, and what kind of price cuts will be offered to do so?

The 747-8 continues to struggle, barely holding on. Boeing says it thinks the cargo market will recover this year, boosting sales of the 747-8F. We’re dubious.

The 767 commercial program continues to wind down. The 767-based KC-46A program ramps up.

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