Farnborough Air Show, July 14: A330 program analysis after neo launch

It was pretty much the worse-kept secret in advance of the Farnborough Air Show this year: Airbus launched the re-engining of the A330, designating the new engine option the A330-800 (the A330-200 successor) and the A330-900 (the A330-300).

Rolls-Royce, as had been widely reported, becomes the sole-source engine provider of the Trent T7000. Airbus also gave it new A350 style winglets and have made enhancements to the cabin with improved seating, IFE and mood lighting, In total Airbus claims to have improved the fuel consumption with 14% per seat. Deliveries will start in Q4 2017.800x600_1405309967_A330-900neo_RR_AIB_01Rebranding the A330, dropping the -200 and -300 names, and adopting the more modern -800/-900 speaks to the significant upgrade of the airplane. Parenthetically, this also follows the pattern set by Boeing decades ago when it went from the 737-200 to the 300/400/500, then the 700/800/900 and now the 7/8/9. It speaks to adopting new technology and is consistent with the sub-type branding of the A350.

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Boeing sees 4% increase in aircraft demand in next 20 years

Boeing forecasts a demand for 36,770 new airplanes during the next 20 years, an increase of 4.2%, in its Current Market Outlook. The value of this demand, which covers the entire commercial aviation line from regional jets and up, is $5.2 trillion.

The company released its annual forecast today, for the period ending 2033.

As with previous forecasts, the single-aisle demand constitutes the vast majority, with a requirement for 25,680 airplanes to cover retirement and growth, the latter being driven by the proliferation of the low cost carriers worldwide. The “heart of the market” for the single aisles has moved up to 160 seats, says Randy Tinseth, VP Marketing. This is the 737-800/8 and A320ceo/neo-sized airplane. The Comac C919 and Irkut MC-21 will join this sector when they enter service later this decade.

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War of Words between Airbus and Boeing over A330neo, 787

By Leeham Co EU

We’ve seen it for decades: the War of Words between Airbus and Boeing around their competing aircraft. It hasn’t taken long for the WOW to emerge over the prospective A330neo. Only a few months ago, Boeing was muted in its assessment about the NEO and its response. No longer.

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For the 200- to 300-seat segment the WOW warning was raised Sunday at Doha, Qatar, in advance of the IATA Annual General Meeting, and no doubt it will stay aloft until this year’s Farnborough Air Show, where the formal launch of the A330neo is expected (as if anyone is doubting after Sunday).

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The start
As Aviation Week reports from the eve of the IATA AGM, John Leahy, Airbus’ chief operating office-customers, threw down the gauntlet by claiming an A330neo economics would be “unbeatable” and its “cash operating cost would equal 787-9.” Boeings counterpart John Wojick countered “at no price can it compete with the 787-10”.

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Of course, that’s not what Leahy claimed. Comparisons have been between the A330-300 and 787-9, not the 787-10.

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What it is all about
After our New Year’s analysis showed that there was a real case for an A330neo (A330neo prospect gains traction) we spent a further four months on the case, digging deeper and deeper. The result was put in our report The Business Case about the A330neo, a 60-page study which took a deep dive into the economics of the A330neo vs the A330 Classic and the Boeing 787-8/9. We did not examine the neo vs the 787-10 because these are different category airplanes, as Boeing’s Wojick should know full well.

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In an apples-to-apples comparison, we found the A330neo significantly narrows, but does not entirely close, the operating cost gap between the A330 Classic and Boeing’s new airplane. Airbus can close the gap and achieve an advantage, however, if it lowers the price of the A330neo to a level the 787 can‘t give. This is central to Leahy’s argument, which is used for the A330 Classic but achieved only with the most favorable assumptions for the Airbus airplane

To summarize:

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Boeing’s approach in creating the passenger experience

Passenger experience continues to become more and more of a focus for the Original Equipment Manufacturers, who try to create an atmosphere that’s appealing even as airlines cram more and more seats into airplanes to gain revenue in an environment where ancillary fees often mean the difference between profit and loss.

Cabin ambiance for mainline, and especially intercontinental, jets is a battle that hasn’t gotten much attention until the advent of the Boeing 787. The creation of the Boeing 747, of course, provided unprecedented space and ambiance and the “wide-body” was followed quickly by the McDonnell Douglas DC-10 and Lockheed L-1011. Creating the wide-body look for the single aisle airplanes followed, with improvements subsequently in overhead bins and the look of the ceiling. But it wasn’t until the 787 that there was a dramatic change in the cabin interior look and feel. Boeing expanded this look to the 747-8 and the 737.

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Odds and Ends: MH370 tracking; Garuda rules out A380, 747-8; last 747-400 flight; E-Jet vs Turbo-props

MH370 tracking: With Britain’s Immarsat and the Air Accident Investigation Board key to determining the general location of Malaysian Airlines Flight MH370, The London Telegraph has one of the best narratives of of the behind-the-scenes story of how this came about. The London Independent also has a good story. And here is a story that explains the difficulties of searching in remote oceans.

  • Update, 10:30am PDT: Aviation analyst and former pilot John Nance is profiled in this Puget Sound Business Journal account that includes’ Nance’s theory of MH370. It’s an intriguing theory. He believes this was a deliberate act–either terrorism or murder-suicide–and that once the flight settled out southbound from Malaysia, it was set on auto-pilot and all aboard, including the pilot, were killed by asphyxiation. The airplane flew until it ran out of fuel and crashed into the Indian Ocean; he even gives a speed and angle-of-attack estimate.

Garuda rules out A380, 747-8: The Australian reports that after planning to order either the Airbus A380 or Boeing 747-8 last year, officials have ruled this out.

Last 747-400 flight: Japan’s All Nippon Airlines plans to complete its last Boeing 747-400 flight this month, ending an iconic era in the country where 747s once ruled the skies.

E-Jet vs Turbo-Props: At the ISTAT conference last week, we reported that Embraer says its E-175 E2 is more efficient than similarly sized turbo props on missions of more than 250 miles. This story in The Economic Times of India follows through on this theme.

Updating the A380: the prospect of a neo version and what’s involved

Recent headlines and this column report that Airbus is considering re-engining the popular A330 with GE Aviation GEnx or Rolls-Royce Trent 1000-TEN power plants. A New Engine Option and other changes would improve the A330’s economy by an estimated 10% percent after offsets for increased drag and weight.

But the A330 isn’t the only Airbus airplane being considered for new engines made popular by the A320neo family. Tim Clark, president and chief operating officer of Emirates Airlines, urged Airbus to improve efficiency of the giant A380 with engine technology found in newer generation aircraft.

How feasible is an A380neo? What are the technological issues? Would there be enough of an economic gain? And is there a market for an A380neo?

The A380 of today

The A380 has been hailed as a highly efficient airliner since it went into service 2008, assuming the giant plane can be filled. But only six years later, the first voices have been raised that this will not continue to be the case should the continuous improvements that have been flowing into the airframe not pick up speed.

The launch of the Boeing 777X also brought focus on the state of the A380 come the latter part of this decade when the 777-9X enters flight testing in advance of its planned 2020 entry-into-service. Tim Clark expressed  that “it is time that the A380 gets an injection of the new technology which is now becoming available for the A320/737 in the form of GTF/LEAP and GE9X for the 777X. “

Before we look into what can be done short-to–mid-term to inject improved efficiency, let’s establish the baseline as it exists today. The A380 is considered by some the most efficient way of flying passengers between two long haul points if there is enough of demand. The competition today is the Boeing 777-300ER and 747-8i.  (Qantas Airways is dropping some A380 flights that have 50% load factors, demonstrating the aircraft is inefficient if the demand is insufficient.)

Let’s assume we want to transport passengers between San Francisco and Hong Kong, one of the longer flights which are made non-stop in both directions. Going West, it takes a Cathay 777-300ER 15 hours and going East, 12 hours, the difference being due to prevailing headwinds going West. For our check, we will use the more demanding of these legs, which then works out as the equivalent of flying 7,200nm. To compare the three different aircraft in a fair way, we need to load them to the same payload, in our case passengers with luggage. We will not consider cargo in this initial analysis. The leg chosen is not one which allows much weight for cargo, but cargo certainly belongs to a complete analysis of an airplane and we will point out where it will affect any conclusions.  

When comparing the standard three-class seating numbers between the OEMs, it is clear these are not made to the same standards of comfort. Airbus has admitted that the A380 is too lightly loaded at 525 passengers. The 777-300ER at nine abreast and 365 seats is equipped with a comfortable 18’’ economy class at 32’’ pitch but the business class is modeled with a non-standard 48’’ pitch. The 747-8i at 467 seats is not laid out to any comfort standards comparable to the other two. To ensure an apples-to-apples comparison we have equipped all aircraft with the same three-class cabin with a standard seating consisting of first class at 81’’ pitch, business class at 60’’ pitch and economy class with 32’’ pitch. Seat widths are 37’’, 22’’ and 18’ respectively and the ratios of the different premium seatings vs. economy are kept the same. Here the aircraft are listed with the in-service year and with their respective payload capabilities:

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Odds and Ends: A330neo; The 12th Man; Boeing’s earnings

Clearing the air on the A330neo, again: Bloomberg News has an extensive story on the prospective development of the A330neo. Following a report from Reuters, these two news articles basically confirm everything we reported in December.

The 12th Man: The Seattle Seahawks, which plays in the Super Bowl Sunday against the Denver Broncos, is well known within the National Football League for its “12th Man.” This is the fan base which has set records for being the loudest fans in football, at a record 137db. They’ve also been recorded on the Richter Scale for their stomping at the Seahawks’ Century Link Field (that’s a local phone company, and the name is routinely shortened to “the Clink”).

Boeing is a corp0rate sponsor of the Seahawks and rolled out its 747-8F house test plane in a new Seahawks livery.

Boeing’s earnings: Boeing reported its 2013 earnings and while they were a record profit, the forecast disappointed and the stock took a major hit Wednesday. The Seattle Times has the recap.

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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Odds and Ends: 787 software; Hazy on 777X; 787 reliability; A340 lemon; 777X won’t be built in WA: MO politician; Chinese war games

787 software: Aviation Week reports that continuing software issues bedevil the Boeing 787.

AvWeek also takes a closer look at Japan Airlines’ decision to take the 787 off certain routes due to the icing issues of the GEnx engines. Most incidents occurred on the 747-8 but one happened on the 787. The 747-8 also uses the GEnx engine.

Hazy on 777X: Steve Udvar-Hazy, CEO of Air Lease Corp and one of the most influential people in commercial aviation, offered his assessment of the 777X specifications in an interview with Aviation Week. He also commented on the future of the A350-800 and the prospect of an A350-1100.

787 reliability: Aviation Week also reports about Boeing’s efforts to improve the reliability of the 787.

A340 Lemon: Bloomberg News, tipped by our select e-newletter distribution yesterday, wrote this story about an Airbus summit to discuss the future of the A340 family in the secondary market. We’ll publish our e-newsletter for general readership with an expanded version next Monday in this column.

Boeing will nix WA for 777X: So says a Missouri politician. KOMO TV (ABC Seattle) ran a piece yesterday in which a Missouri politician said all indications they’ve had from Boeing is that the 777X won’t be built in Washington State. The clip is not on the KOMO website, however, but we saw it while watching the news.

Pacific War Games: “War is Boring,” a blog, ran a war game involving the current Chinese action declaring a defense identification zone in airspace between China and Japan. We’ve no clue over the quality of this blogger or the war game, but we were reminded that the Pentagon had war game scenarios that were important in the KC-X competition. This was one reason the Northrop Grumman-EADS KC-330 MRTT won the competition (later overturned)–because of the vast distances involved in the Pacific and the assumption that China may be successful in a conflict of what’s called Anti-Access, Access Denied (A2AD) that would have isolated US bases in Guam and Japan. The USAF concluded the EADS KC-330’s longer range vs Boeing’s KC-767, greater loiter time and greater refueling capacity was important to the selection.

Airbus, Boeing production backlogs stretch to late this decade, early next decade

Airbus and Boeing production backlogs stretch to late this decade and into the beginning of next decade for most of their commercial aircraft, based on today’s production rates.

We previously wrote about the waning sales of the 777 Classic and the A330. Some mainstream media subsequently examined 777 Classic sales but not the A330 sales.

Both OEMs will be challenged to meet intended production timelines for select currently in-production models.

  • Airbus and Boeing officials each said they plan to build the A320ceo and 737NG families two years into the entry-into-service of the A320neo and 737 MAX families. Airbus’ ceo backlog appears to meet this desire, but the 737NG currently has a backlog that only matches the 2017 EIS of the 737 MAX.
  • Airbus says it plans to produce the A330 into the 2020 decade (most statements suggest until about 2022).
  • Boeing has a 2020 EIS for the new 777X program, but the backlog of the 777 Classic currently extends only to 2017.
  • The USAF wants replacements for its 747-200 presidential fleet in 2021 but Boeing’s backlog for the 747-8 only extends to 2017.

The following chart is based on current backlogs reported by Airbus and Boeing in respective data charts; and it is based on the current production rates of each program. For the new airplane programs, the chart assumes the current production rate and does not take into account the stepped ramp-up for the A320neo, the 737 MAX, the A350 XWB or the 777X. For the latter two, production rates are assumed at the A350’s announce plan of 10/mo and the 777 Classic rate of 8.3/mo. The 787 rate is assumed at 10/mo, although the rate is not quite there yet.

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