Back to the Future with PeoplExpress

PeoplExpress, a fast growing no-frills carrier of the 1980s, is returning in name only. A new company, wet-leasing planes from another airline, uses the old name and the most of the old business plan to start service soon from Newport News (VA).

But in an erroneous set of conclusions, some are calling the business plan a radical departure from today’s airlines. In fact, the bare-bones, no-frills service offered by the new PeoplExpress was used by its forerunner and is truly the model for today’s Ultra Low Cost Carrier (ULCC), long before Ireland’s Ryanair and the USA’s Spirit Air adopted the model.

You pay for everything: soft drinks, checked baggage, and so on. There have been refinements since then, expanding the fee-based formula of the original PE, but fundamentally the ULCCs of today are based on the PE of yesterday. The new PE simply follows the ULCC approach.

The new PE will wet-lease Boeing 737-400s from a Las Vegas airline, Vision. Jeff Erickson, former CEO of Midway Airlines, Reno Air, Atlas Air and TWA, is the CEO of PE. We’ve known Erickson for more than 20 years. If PE is well-funded (and we don’t know the finances), we believe Erickson can indeed find a niche for the carrier as legacy airlines continue to give short shrift to smaller markets. Newport News doesn’t strike us as an obvious place to headquarter or hub an airline, but this decision was made before Erickson came on board.

 

 

Embraer selects PW GTF for E-Jet RE; concept clarity comes at last

It’s official: Embraer selected the PW GTF to re-engine the E-175, E-190 and E-195.

In doing so, it looks like the E-170 will be allowed to wither on the vine.

This is a huge win for PW and setbacks for Rolls-Royce, which sorely wanted to win the E-Jet RE for its Advance 2 RR development; and for GE, the incumbent supplier of the CF34 and which was developing the Next Generation variant for the E-Jet.

EMB EJet RE

It’s yet another validation for the GTF. Versions of this engine will power the Mitsubishi MRJ, the Bombardier CSeries, the Irkut MS-21, the Airbus A320neo family and now the E-Jet RE.

It’s a huge comeback for PW, which made a major strategic error in not competing to power the Boeing 737 300/400/500. Boeing continues to use the GE/CFM LEAP engine as its sole-source supply for the 737 MAX, though Boeing seriously evaluated the GTF as well.

Below is EMB’s press release:

Embraer Selects Pratt & Whitney’s PurePower Engines for Second Generation of E-Jets

São José dos Campos, January 8, 2013 – Embraer SA (NYSE: ERJ; BM&FBOVESPA: EMBR3) announced today that Pratt & Whitney´s PurePower® Geared TurbofanTM engines have been selected for its future, second generation of E-Jets, with entry into service planned for 2018. The decision is an important milestone in the program, which is expected to be officially launched later this year.

The new engines – the PW1700G and PW1900G – range in thrust from 15,000 to 22,000 pounds. In combination with new aerodynamically advanced wings, state-of-the-art full fly-by-wire flight controls and other systems evolutions, they will result in double digit improvements in fuel burn, maintenance costs, emissions and external noise.

“We are very happy to expand our partnership with Pratt & Whitney, keeping the E-Jets family as the best solution for our customers, today and in the future”, said Frederico Fleury Curado, President & CEO of Embraer. “The PurePower GTF engines are a great fit to the next generation of our E-Jets and we look forward to another long lasting and successful program with Pratt & Whitney”.

“We are proud that Embraer has recognized the unmatched value of the PurePower engine, and we are committed to supporting a successful launch of the new E-Jet aircraft family,” said Pratt & Whitney President David Hess. “To date, Pratt & Whitney has completed more than 4,200 hours and 12,400 cycles of full engine testing for the PurePower engine family, demonstrating the benefits and reliability of the engine architecture.” Pratt & Whitney is a division of United Technologies Corp. (NYSE: UTX).

The second generation of E-Jets will be a significant step in Embraer´s commitment to continuously invest in this line of commercial jets, complementing a series of ongoing improvements currently being implemented in the existing family, with great benefits to its customers. Embraer´s objective is to offer the best product and maintain its leadership in the 70 to 120 seat market.

737-9 Mission creep, Odds and Ends and 500,000

Boeing Commercial Airplanes CEO Jim Albaugh was clear: he wants changes to the 737 MAX to be kept to a minimum.

This will keep the R&D cost down–a figure Corporate CFO James Bell said on the 2Q earnings call would be 10%-15% that of an entirely new airplane ($10bn-$12bn, depending on who’s figuring; it is unclear how much of the R&D is paid by CFM).

But there is pressure to add range to the 737-MAX 9 (henceforth we’ll be referring to individual models of the MAX series as the -7, -8 and -9 and the family as a whole as just MAX). The 737-9 falls short of a true 757 replacement in range.

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