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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American easing away from continuous hubbing, returning to peak banking

American Airlines will ease away from the continuous hubbing that smooths operations at key airports, increases aircraft utilization and cuts costs as it returns to the peak-and-valley hub-and-spoke system adopted decades ago under former CEO Robert Crandall.

Although this will mean higher costs and big gaps in airport activity, the increased revenue potential–called the power of the hub under Crandall–will offset the increased costs, says Derek Kerr, CFO of American.

We were at American’s Leadership Council meeting for 1,500 employees yesterday. The meeting itself was off the record but we talked with Kerr afterwards on the record.

Kerr, CFO at US Airways prior to the merger between AA and US, said that the continuous hub can’t connect as many passengers as the traditional hub, leaving revenue on the table. Continuous hubbing allowed a 45 minute ground time, which is too short–an hour is needed to maximize connections.

Re-hubbing will occur this year at Chicago, Miami and Dallas.

Southwest Airlines was a pioneer in continuous hubbing, though it wasn’t called this until perhaps a decade ago. Southwest essentially rolls the airplanes up, deplanes, enplanes and departs. At its origin, long before carry on bags, bag fees, security issues and other factors arose, Southwest “turned” its planes in as little as 10 minutes. Today turns are 30 minutes or longer, in part as planes get larger and carry-on bags slow the enplaning process. Still, Southwest eschews the term hubbing and indeed its connection percentage is far lower than American and other traditional airlines.

The de-hubbing is just one step the US Airways management team is taking to remake American following its emergence from bankruptcy last year and the merger in December.

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Airbus, Boeing face pricing pressure

Airbus and Boeing face pricing squeezes that are the result of their continuing price wars and two products that need price cuts to maintain sales.

The fierce single-aisle battle between Airbus and Boeing, and to a much lesser extent, between Airbus and Bombardier, puts pricing pressure on the A320ceo and to some degree the A320neo.

Airbus and Boeing each blame the other for a price war that has put pressure on margins for the in-production airplanes, but market share battles are only part of the issue. There is the need to keep the production lines humming for these airplanes in advance of the transition to the re-engined A320neo and 737 MAX, particularly as the Big Two up production rates over the next few years.

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CSeries FTV 4 to launch this month with PW GTF testing focus

Bombardier’s CSeries flight testing has now passed the 250 hour flight mark, with three Fight Test Vehicles (FTVs) in the program. FTV 4 is due to become airborne in May. This will be a milestone for the program because this is the airplane that will focus on the performance of the Pratt & Whitney P1000G Pure Power engine that is so integral to the development of Bombardier’s leap into the mainline jet business.

When BBD first proposed aircraft in the 110-130 seat sector, the C110 and C130, in 2004, this was “just another airplane:” little new in the way of airframe technology and using engines then in production. Withdrawn from the market after little interest, BBD revised the airplane into the CS100 and CS300, using an aluminum lithium fuselage and PW’s new Geared Turbo Fan engine.

The GTF promises around 15%-16% fuel consumption reduction and a dramatic decrease in noise footprints. While BBD has gained knowledge of how the GTF is performing from the first three FTVs, No. 4 will be the one that will prove whether all the engineering projections for the engines are correct and whether the engine/airframe combination will meet BBD’s promises of fuel efficiency.

Bombardier also hopes that meeting these representations will get a few customers that have been in the “show me” column to become believers. Disappointed with three program delays that have moved entry-into-service back to the second half of next year, potential customers need some solid results.

The stakes couldn’t be higher for BBD. The CSeries promises quieter operations at especially noise-sensitive airports, including Billy Bishop Airport in BBD’s own backyard in Toronto. Porter Airlines has a conditional order for up to 30 CS100s for use at this downtown airport, and the promised quiet operation is key to government approval to allow commercial jet operations there. This isn’t the only noise-sensitive airport.

Bombardier promotes its CSeries as being more economical than the competing Airbus A319neo and Boeing 737-7 MAX, and our analysis concurs. Sales figures also support BBD: the CS300 has far outsold the A319neo and 737-7.

For Pratt & Whitney, this is the beginning of the end of more than 25 years of research and development of the Geared Turbo Fan, a multi-billion dollar bet to return to the commercial airline engine market it once dominated but lost to rival CFM International when the latter won exclusive rights to power what is now referred to as the Boeing 737 Classic, rights that continue through the 737 MAX.

PW’s bet to return paid off. More than 5,000 GTFs have been sold on the CSeries, the Mitsubishi MRJ and Embraer E-Jet E2, on all of which it is the exclusive power plant; and it has evenly split the market on the A320neo family, on which it competes with CFM and its LEAP engine.

The industry keenly awaits flight test results from BBD’s FTV 4.

Odds and Ends: Airbus neos; 757RS/A320RS; charity efforts

Airbus neos: The conversation continues, with Tom Williams, EVP of programmes, giving an interview to Flight Global about the A330neo and the A380neo. Plane Talking has another version of the Williams interview. Notable in Plane Talking’s report is the indication Williams said it will be a year before a decision is made on the A330neo. Our information is that a decision, whether yes or no, is due this year. PT also reports Williams indicated an A380neo would be a 2020s product. This suggests the prospect of a new engine from Rolls-Royce, which is under development, or conceivably a Big Engine Pratt & Whitney GTF could be considered.

757RS/A320RS: Aerotubropower, whose expertise is engines, discusses the implications of the planned improvements in fuel burn on the Pratt & Whitney Geared Turbo Fan and what this means for the replacement of the Boeing 757, 737 and Airbus A320 families.

Charity efforts: IAM 751, the touch-labor union for Boeing, is often portrayed as a bunch greedy members who feel a sense of entitlement. One can certainly debate this point, but what isn’t debatable is 751’s efforts at charity throughout the year. Every once in a while, we pop over to 751’s blog. Today (Feb. 19) the first four items are about philanthropic efforts in Pierce and King counties.

Just as 751 members are often cast as greedy, so is Boeing, so it is only proper in this context to point out that Boeing also engages in philanthropic endeavors throughout the US (we don’t know about abroad). Here’s a link to some of Boeing’s efforts.

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.

Assessing the Air Canada 737 order: factors that likely played a role

How did Boeing win the Air Canada mainline 150-200 seat jet order when only a couple of weeks ago Flight Global reported the Airbus won the deal?

We, too, heard that Airbus seemed to be the favorite, but the information was soft. We’re not rapping Flight Global—undoubtedly it was confident in its sourcing, but this just shows that a situation can change dramatically and quickly.

We’ve been following the competition for months, behind the scenes, and here are factors we understood that were involved.

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CFM LEAP accelerating in test program; Airbus and the A350-800

Aviation Week has a long, detailed story about the test program for the CFM LEAP engine, which is accelerating rapidly.

In its 737 MAX program update yesterday, Boeing said the LEAP-1B has begun testing and it will benefit from the testing already underway for the LEAP-1A, the version that is designed for the Airbus A320neo family. The LEAP-1C for the COMAC C919 is on its original schedule for certification in 2015, despite the fact the C919 has slipped to at least 2017, reports AvWeek.

The 737 MAX is exclusively powered by the LEAP, as is the C919. The former has more than 1,600 firm orders and the latter just hit its 400th order/commitment. CFM faces competition on the A320neo family from Pratt & Whitney’s P1000G Geared Turbo Fan, where PW holds a 49% market share against CFM, which previously held a larger, more dominate position in the A320ceo competition. A large number of orders don’t yet have an engine selection.

PW is the sole-source engine provider for the Bombardier CSeries, the Mitsubishi MRJ and the Embraer E-Jet E2. PW splits the engine choice on the Irkut MC-21 (soon to be renamed the YAK 242) with a Russian engine.

Just as Boeing’s LEAP-1B will benefit from the experience of the LEAP-1A now in testing for Airbus, Airbus will benefit from the testing and experience of PW’s testing of the GTF on the Bombardier CSeries.

Aviation Week also has a story about the Airbus A350-800 with the blunt headline, The airplane Airbus doesn’t want to build. This refers to the A350-800. AvWeek muses that the outcome of the merger between US Airways, now the largest customer for the airplane, and American Airlines, may be the deciding factor for the airplane. We agree. With American’s large order for the Boeing 787-9, the A350-800 would be unnecessary.

That would then leave Hawaiian Airlines as a key decision-maker. We hear in the market that Hawaiian is just sitting back and waiting to see what kind of incentives Airbus will offer to entice a switch to the larger A350-900.

CSeries first flight may be Sunday, says Reuters

The thrice-delayed first flight of the Bombardier CSeries may come Sunday, reports Reuters.

We previously posted some thoughts on the pending first flight. We expanded on these thoughts in our e-mail newsletter Aug. 26. Below is the entire newsletter.

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