Original Equipment Manufacturers are ramping up their focus on services to increase these as profit centers for company financial performance.
The news April 10 that Boeing will relocate its Commercial Aviation Services unit from Seattle to its fading facility in Long Beach (CA) is another example. After-market support services for all DC- and MD- models and the out-of-production 7 Series airplanes previously were relocated to Southern California. Now, support for the in-production 7 Series (except the 787), the 737-based P-8A Poseidon and the forthcoming KC-46A will shift to SoCal. The 787, 737 MAX and forthcoming 777X support will be in Seattle.
A320neo Plus: Airbus is pondering a Performance Improvement Package (PIP) for the A320neo family even before the airplane enters service, according to Aviation Week. The improvements would include an upgraded interior and several systems, designed at providing more carry-on cargo space, more seats and better economy. This fits with a desire to focus on product improvements rather than launching another new airplane program. The prospect of launching the much-discussed A330neo is also referenced in the AvWeek article.
Boeing moves more jobs: The Seattle Times reports that Boeing is moving more jobs out of Seattle, this time also to Southern California. This time these are defense jobs. Boeing has been migrating defense jobs out of Seattle for many years.
Separately, Boeing named its Suppliers of the Year for 2013. These companies are profiled in short videos here.
MH370 search: The Wall Street Journal has a good update of the search for Malaysian Airlines MH370 using the Bluefin 21 unmanned submarine.
At the IATA Cargo symposium last month Fred Smith laid it on the line – there is currently over-capacity in the market, the Industry is undergoing what he described as a profound transformation and he warned that the good old days will not return.
This message was supported by IATA that warned its members that the air freight portion of the pie is continuing to shrink and air freight is losing market share to other modes of transport. There needs to be significant improvements in execution and delivery of the air freight offer – transaction costs are too high and little improved since the 1950’s in terms of a door-to-door transaction.
What is the impact for the freighter business – new builds and conversions? Old fuel inefficient platforms are out and what Fred Smith described as ‘low cost belly space’ is in. Airline cargo managers are moving out of main deck freighters (IAG, JAL, United, American, Delta to name a few) and befriending their passenger colleagues for space below the main deck to accommodate their cargo which they can sell at rates and profit margins not dreamed of before.
ExIm fight, again: Republicans and the conservative Heritage Foundation are once again attempting to kill the US ExIm Bank, which providing financing support for Boeing airplanes.
This isn’t a sexy topic for our readers, but it’s an important issue we’ve written about many times. While the Republicans and Heritage call this corporate welfare (of which we’re generally disdainful), we disagree in this instance. It’s a matter of competitiveness.
Loren Thompson, with whom we’ve often disagreed, and whose institute is partly funded by Boeing, takes on the effort to kill ExIm in this column. His underlying facts are valid, though his tiresome shot at Airbus subsidies and Boeing’s innocence is laughable once more. The WTO found Boeing received illegal subsidies, too, and of course we just witnessed Boeing getting the largest subsidy in corporate history from Washington (State, that is)–all of which Thompson ignores.
The reason we support ExIm’s continued existence has nothing to do with who gets what subsidies; it has everything to do with the fact that Europe’s export credit agencies fund Airbus airplanes and Boeing needs to have ExIm to compete. (We’d be less harsh about Thompson if he would stick to this topic rather than beating the subsidy drum with highly selective facts on an issue for which he was paid by Boeing to issue a study during the WTO dispute.)
National Review’s critique of Thompson totally ignores the Airbus export credit support challenge. There may be merit to many practices about ExIm to criticize, but these critics need to focus on the ECA competitive advantage for Airbus should ExIm go away. Boeing’s right on this one.
The recent announcement by Rolls-Royce that their future engines will contain gearboxes has put GE and its CFM partner SAFRAN under considerable pressure.
GE/SAFRAN were together with Rolls-Royce proponents to go directly from Direct-Drive turbofans to Open Rotor designs for the next generation aircrafts. This left Pratt & Whitney as the only major engine manufacturer promoting high by-pass ratio geared turbofans as a better alternative for these aircrafts. With the Rolls-Royce announcement of Advance for 2020 (Carbon fanned tri-shaft) and Ultrafan (Geared big fan) for 2025, this has all changed. Suddenly Pratt & Whitney has strong support in their strategy and GE/SAFRAN stand out as loners.
By honing key technologies in their traditional two shaft turbofans GE, and GE/SAFRAN in CFM, have built a market leading position in all thrust classes, Regional (CF34), Single Aisle (CFM56) and Dual Aisle (CF6, GEnx, GE90). Their declared next step was Open Rotor for future Single Aisle while keeping Direct-Drive for larger engines.
Airbus and Snecma continue to research open rotor technology. Aviation Week has this story.
Now this solid position is threatened. The geared architecture has won the future regional market (CSeries, MRJ, E-Jet E2 goes PW GTF), market parity on the A320neo family and the 757 replacement studies by Boeing (dubbed NAS, New Airplane Study) will not go Open Rotor as Open Rotor only works up to M 0.75 and the 757 replacement will likely fly over 4,000nm, necessitating higher cruise speed. The NAS will thereby favor a geared turbofan instead of Open Rotor. Why not Direct-Drive? There are two major reasons:
A geared design allows higher by-pass ratios and thereby higher propulsive efficiency without the engine being too heavy from its large low pressure turbine needed to drive a high BPR fan.
A geared design can allow the big fan to rotate slowly and with a low pressure ratio. This creates a low noise engine, a very important feature for aircrafts operating out of noise troubled airports.
GE/SAFRAN has shown with their CFM LEAP project that they can match the efficiency levels of a geared engine like Pratt & Whitney’s GTF, using its superior hot section technology to achieve the high efficiency. It cannot achieve the low noise levels of a geared fan however; engine noise stands in direct relation to fan rotational speed and pressure ratio.
It will thereby be the environmental factors that will put the most stress on GE/SAFRAN’s present strategy. Having lost the regionals to the geared camp, will it also lose the next generation short/medium haul? It will be interesting to watch the GE/SAFRAN over the next 18 months: does it change strategy or not? If one goes by the recent words of GE Aviation President David Joyce (who spoke at last week’s opening of their Indiana LEAP factory), he thinks his present line-up is fine for a 757 replacement, and he sees no urgent need for new developments.
Twelve more Airbus A350-800 orders vanished as Aircraft Purchase Fleet canceled, according to the latest tally from Airbus. APF is the special purpose company set up for Alitalia Airlines, which is a financial basket case and probably couldn’t finance a Piper Cub, let alone an A350. In this case, the -800s were not upgraded to -900s or -1000s, according to the monthly Airbus Orders and Deliveries tally. There are now just 34 A358s in backlog.
The shrinking backlog further suggests the need for a refresh of the A330 with a re-engine, in our view. Without the A350-800, Airbus won’t have a competitor in the 250 seat sector that has any current technology. An A330neo with new engines would at least fill some of this void.
Meantime, Delta Air Lines issued a Request for Proposals for 50 wide-body aircraft to replace its aging Boeing 747-400s and some 767-300ERs. Delta’s CEO has said he could be interested in the A330neo. Delta eschews new technology, preferring “proven” technology, which could work against the Boeing 777X powered by an entirely new engine. By the time Delta would be ready to take delivery of its order, the A350XWB and its new technology will have been in service for many years. Delta has a deferred order for the Boeing 787-8 it inherited from Northwest Airlines, and this technology will be mature by the time Delta would be able to take delivery, so the 787 family could be in the mix. So could an A330neo, which would most likely be powered by one of the 787′s engine options, the GEnx or the Rolls-Royce Trent 1000 TEN. Market intelligence tells us Delta is pushing the GEnx, given its strong relationship with GE.
Airbus, Boeing square off on tankers: The Big Two OEMs are bidding for a sale to South Korea on airborne refueling tankers. If we remember correctly, this will be the first head-to-head competition since the USAF from 2004-2009.
IAM election: Voting begins this week, through the month, for officers of IAM International. This is the first contested election in decades, driven in no small part by the bitter vote at Boeing’s IAM 751 district in November and January over the 777X contract. The Street.com takes a look.
Russian titanium: With selective embargoes going on against Russia over Ukraine, we remarked at the time the prospect of an adverse affect on aerospace because titanium is a major resource from Russia and a major component in aerospace. Thus, a headline caught our eye about a Russian who attempted to do a deal with Boeing to sell the company the precious metal. Only this story was a bit more sordid; it makes for an interesting read.
MH370 hunt and hell: Officials vow to hunt for Malaysian Airlines Flight MH370 until hell freezes over. Mean while, more focus on CNN’s 24/7 MH370 coverage and its affect on its own ratings. We did note, however, that the shooting at Ft. Hood actually pushed MH370 off the front page of its website.
Two orders were announced this week for the Airbus A330 and Boeing 777-300ER, important for filling the production gaps of each airplane. In the aggregate, the current backlogs go through 2016, though in reality, they stream beyond that date. See our charts below.
Airbus announced an order for 27 A330s from China, but these were the airplanes long frozen in the push-back by China against Europe in the emissions trading scheme objected to by China and a number of other countries. China routinely freezes airplane orders (among other commercial deals) to express its political displeasure.
At current production rates for the A330 or 10/mo, this adds 2.7 months to the Airbus backlog, but offset with deliveries, the aggregate backlog (i.e., if all deliveries were bunched together) means the backlog ends in 2016. With the Chinese order, Airbus announced 31 sales year-to-date.
A large debris field has been spotted in the search for Malaysian Airlines flight MH370. A satellite from Airbus Defence and Space photographed 122 large and small pieces of something. Searchers are en route to eyeball and recover this to determine if the debris is from the plane.
We plotted the location and created this image to further illustrate the remoteness of the location. This is at the edge of the potential search zone we plotted shortly after the airplane disappeared.
We also added the reported and estimated flight paths, though we were unable on this scale to include the several reported turns within the Strait of Malacca area. There are distinct turns from the intended flight path (and several more within the Strait of Malacca that were reported) which, to us, indicates a pilot-in-command of some kind, rather than a “ghost” airplane.
As we linked yesterday, former pilot John Nance believes a criminal act took illegal command of the airplane and then once on the southward tract put the plane on auto-pilot and then depressurized the airplane, killing all on board. The Boeing 777 then flew south to fuel exhaustion.