A hint of things to come–Lufthansa 787 order?

Lufthansa Technik “is set to become a leading 787 MRO” following a deal with JAL, blares a headline in AviTrader’s current issue of MRO magazine.

The magazine writes:

Lufthansa Technik will become one of the world’s leading 787 MRO providers after concluding a Total Component Support (TCS) contract with
Japan Airlines (JAL) to support its fleet of 787 Dreamliners. The agreement runs for a term of 10 years and will see the MRO provide material
support, including repairs and logistics services, for JAL’s fleet of 35 Dreamliners from the moment its first aircraft is delivered next year. Lufthansa
Technik will supply its customer with materials from Tokyo as well as from its existing material locations in Frankfurt and Hamburg.

JAL has GEnx engines on its 787s, which may give GE the edge in engine selection for Lufthansa.

The German airline has been evaluating the Airbus A350 XWB and the 787 for many months for what would be a huge order, perhaps 150, across the Lufthansa group.

Lufthansa is expected to make a decision next year and we think it likely a split order would be forthcoming. Although there is a strong case for Boeing to win the entire order, we doubt this will happen.

Why would Boeing be the sole winner? Lufthansa simply doesn’t need the extreme range of the A350–up to 8,500nm. The talked-about 787-10 is, for the moment, a 6,900nm range airplane which is more suitable for Lufthansa. If you want this airplane, which is sized as a replacement for the 777-200ER, then you might as well stick with commonality of the 787-9 (with which you get the long range anyway).

At the same time, the A350-900 and A350-1000 have greater range and capacity and since Lufthansa is German and so is half of Airbus, an order is all but certain.

In addition to the 787 MRO deal, Lufthansa Technik contracted to service the 787’s Hamilton Sundstrand components. Write AviTrader:

The contract with JAL was Lufthansa Technik‘s first for services on the 787. It followed the deal up a week later when it negotiated a licensing
agreement with Hamilton Sundstrand to become a partner in Hamilton Sundstrand’s support network for Boeing 787 components. Hamilton
Sundstrand is the biggest single supplier of components for the 787, accounting for over 40%. According to Andrich, the licensing agreement
gives Lufthansa Technik access to repairs, the development of repair
solutions, test rigs and more, and will ensure that the company has a
‘firm foothold’ in the 787 for a long time.

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35 Comments on “A hint of things to come–Lufthansa 787 order?

  1. I am not sure about your conclusions. If LHT wants to be one of the top MRO facilities they need to support the new generation of aircraft despite which is chosen by LH themselves. Furthermore they are providing MRO for 757 and 767 which are not in LH fleet. There is no causality from the JAL deal to the LH decision.

  2. LH does a lot of 3rd party work and makes good money with that. They also provide logistic service for the Superjet – but will they buy them? I am very much in doubt about that…
    Also, LH will not care about Airbus being half german. Air France is still partly owned by the french government, so they are maybe not entirely free in their aicraft (and engine!)choices, but LH is not restricted at all.
    So it’s completely up to which aircaft will do the better job (or whoch has the better net present value for LH). It could be that for oe particular mission it’s a B787, for another a A350…

    • LH bought the 748 ( at bargain prices at that ) and have a finely granulated airframer agnostic fleet around.

      I would not be surprised if they order the 787-9.
      I don’t think they will take on any bargains from the 787 Mk1 cancellations if available.

      • @Uwe:

        Do you have any proof of LH purchasing the B748 at “bargain prices”?

        Regarding LH, I don’t think LH will order Boeing because of the MRO, I think they will split the order because the B787 and A350 offer different capabilities. The order will be large enough where they will have efficiencies. I see B789/B787-10/A359 and possibly A35J order. The B788 might be too small even for LH’s subsidiaries.

        • “Do you have any proof”

          Should be on flightglobal:flightblogger’s blog.

          Around the 50% mark. ( including long overdue compensation for
          discontinuing Connexion on Boeings side )

  3. Know your specimen.

    LH knows the Dreamliner will be an MRO providers fount of gold ;-?

    Engines with regular PIPs already in in the chute,
    applying relevant (back)ported fixes from the production line ( -9 -8) imrpovements.

    The way it looks the revolutionary low MX requirements
    will probably not come to fruit.

  4. LH will follow the current trend of dual-sourcing (UAL, Air France/KLM for 787/A350; AA for A320/737), which allows an airline to receive aircraft faster than if it was only using one provider. On orders of such a magnitude, dual-sourcing does not add any additional cost.

    It won’t have anything to do with Lufthansa Technik’s deal.

  5. F14TCT, LH is already duel-sourcing. They have a few A-380s and will be getting their first B-747-9I in a few months. These will begin replacing the B-744s as they retire, or get converted for LH-Cargo. I think they will order both the B-787-9/-10 and A-359. These airplanes will replace the A-343/6s and the A-332s LH group now flies.

    Even though the A-350 line and B-787 lines are ‘sold out’ for most of this dacade, LH is a premium customer for both Boeing and Airbus. Somehow, I think both OEMs will find the slots LH wants.

    I don’t think LH flies the B-777-200ER. The only B-777 model they could use would be the B-77F (didn’t LH order some recently to begin replacing the MD-11Fs?).

    Uwe, what makes you think the “revolutionary low MX requirements” for the B-787 will not come to fruit? IIRC, both the EASA and FAA have approved it to have the same MX schedule interval as the current A-330, and the interval may increase as the B-787 matures.

    • duel-sourcing: dirge or saber ;-?

      ” …both the EASA and FAA have approved it to have the same MX schedule interval as the current A-330, …”

      The dreamliner was announced to more than double times over the competition
      ( and in general just require dusting off on a bidecadal scheme 😉

      Don’t know if the A330 has grown up or the 787 down.
      ( Interesting that you already see equality as redeeming while previously
      handsdown superiority was your mantra )

      Anyway, that is regular MX.
      What I expect is quite a bit of “irregular” work for LH-Technik.
      I just don’t believe the Dreamliner will perform a magic shedding and
      do the beautifull swan from ugly duckling thing in revenue service.

      • The MX interval of the A-330 was increased a few years ago, in 2008, I believe. The increase was approved by the EASA and FAA to near match that of the B-787.

  6. Jacobin777 :
    @Uwe:
    Do you have any proof of LH purchasing the B748 at “bargain prices”?
    Regarding LH, I don’t think LH will order Boeing because of the MRO, I think they will split the order because the B787 and A350 offer different capabilities. The order will be large enough where they will have efficiencies. I see B789/B787-10/A359 and possibly A35J order. The B788 might be too small even for LH’s subsidiaries.

    Wasn’t LH one of the 747-8i’s launch customer? I thought it’s a foregone conclusion that the launch customers always get “bargain” prices from any of the OEM’s.

    On LH ordering the 787: I might be wrong, but I think I remember LH saying the only version of the 787 that would fit their needs would be the -10. I don’t think the MRO’s are an indication of which way this order will go. I like others think it’ll be a split buy, maybe not at once, but I’ll be surprised if they don’t operate both the 787 and A350 sometime.

    • LH was “The Launch Customer” and the single taker for quite some time after that.
      next one was Korean quite a bit later.
      After the pricing surfaced intermeshed with the open bill over Connexion around
      the time the Dreamliner rebates were made public by flightblogger the puzzle looked
      a bit more consistent.

    • Launch customers get great deals (due to inherent risks, etc.) but I’m not sure about “bargain” prices regarding the B748i.

  7. I think Lufthansa gives greater consideration to whether their passenger planes make good freighters than do other airlines. Hence their slightly eccentric attachment to models like the A340 and 747-8I This might play to the advantage of the A350.

  8. I see the 787-8 (original spec) as having a niche against the larger, heavier A350s.

    If Boeing gets it right in a few years, that could become a succesfull aircraft next to A350-900s/1000s. Just like the A330 next to the 777 with many airlines.

    I see LH doing that 788 + A359s.

    The A340-600 covers the gap up to the 747-8i and A380. They are all less then 10 yrs old and are very important for LHCargo.

    http://4.bp.blogspot.com/-KMtRgPpagdw/TctZicnoNDI/AAAAAAAAFUE/AkF6jGTSvCc/s1600/a340-600_lufthansa_airlines.jpg

  9. For Lufthansa, there are major problems ahead with their B747-8i’s. There are only four B747-8i customers. Together they ordered only 36 units of that aircraft. And it doesn’t look as if there will be more customers anytime soon. Quite to the contrary, there is a relatively high possibility for cancellations (e.g. Atlas Air).
    It won’t pay off for Boeing to maintain a spare parts and service logistics line deserving its name for the B747-8i, not even for the B747-8F, as that freighter aircraft is also undersold (with only 111 units so far).
    All this is hinting at a very low service availability of those aircraft, once they have been in service for a couple of years.

  10. LH’s single deck medium & long haul fleet requirements as Leeham concludes will almost certainly result in dual sourcing.

    The debate revolving around LH 7478i sourcing prices is surely correct, as launch operator & the only order for the type with any significant volume value means LH needed shallow pockets to finance it, fifty percent discount claims seem a tad steep, forty four percent seems more likely.

    Exposure to risk for launch customers is very high, LH will be the only operator of the type to many its destinations, this in itself is logistically is very high risk. LH being a very astute carrier would have factored all elements of concern into the contract. The recent debacle over recent 748 freighter & the performance is certain to impact on the 8i we wait to see just how Boeing, LH & other carriers react to any such shortfall.

  11. Life is full of surprises, but I would be very surprised indeed if LH orders any
    787s, no matter how much MRO work they get!
    But than, I was also astonished when KLM/AirFrance bought 787s!

  12. KC135TopBoom :
    IIRC, both the EASA and FAA have approved it to have the same MX schedule interval as the current A-330

    You don’t recall correctly. The 787 maintenance program was approved by the FAA in 2009 and by EASA last month with scheduled intervals which are just about double those for the 767 & A330 across the board. Systems checks are up to 36 months, and the first structural inspection is at 12 years. The 767 and A330 are at 18 months for systems and 6 years for internal structure.

    Sounds like fruit to me! 🙂

    • CM, depends on the maintenance program, cycles etc. Many A330 are on 8 yrs. Smart MSG 3 programs reduce costs & requirements.

      To value an Aircraft maintenance program there is much then just comparing base maintenance intervals. For many airlines 3 smaller checks instead of 1 big one can be cheaper, less time consuming and lower impact on flights scheduling. Many small checks, smart planning of maintenance tasks, condition monitoring..

      • Keesje, re #21

        You are correct, a deferred event can be larger than one occurring sooner. Specifically if you are comparing apples to apples (e.g. an aluminum structure vs an equivalent aluminum structure in equivalent operations.) Deferring the structural inspection will always result in higher non-routines when comparing two identical aircraft. However, the 787 events are a direct result of MSG-3 analysis of a different kind of airframe. The drivers of structural maintenance intervals from the MSG-3 process are accidental damage, environmental damage (corrosion) and fatigue. The CFRP structure being used on the new-generation twins is demonstrably better on all three counts. Hence the longer intervals. It’s worth noting, these are also the factors which drive non-routine maintenance, so non-routine maintenance factors should be reduced as well, even with the longer intervals.

        Even if you do not believe there is a non-routine advantage to the new generation structures, there is a second, more powerful factor to consider when looking at an aircraft with longer maintenance intervals: From an accounting perspective, a month-long / million dollar maintenance event which takes place at year 8 (777) versus the same maintenance event taking place at year 12 (787) means I get 30 days of revenue on my books at year 8 and keep the costs associated with the check off my books till year 12. From a time-value of money (net present value) perspective, this is very powerful in favor of the economics of the 787.

        Re. “many” A330s being at 8 years… Airbus’ only recently escalated the base maintenance program for the A330 from 5 years to 6. I work with the airlines on this stuff every day and I am not aware of a single operator who has successfully escalated the A330 internal check from 6 years to 8 for own operation. This is a bit of hype to help the A330 compete with a 777 base program at 8 years and and a 787 base program at 12. While the A330 and 777 are the same generation, there are some difference between the way the two structures are designed and finished in production, which account for the difference in the check interval. Not right or wrong, just different. The 777’s 8 year check does not come free to Boeing or to 777 operators – The best comparison for the A330 (structurally) is the 767, which achieved the A330’s current 6 year intervals more than a decade ago – Because the 777 is structurally a different animal, it had 8 years out of the box.

    • New systems architecture (including a panel “incident” in the middle of flight test), unprecedented amount of composite structure as well as a new method of bringing it all together and they double the inspection intervals!?!

      Verrrrry interrrrestinggggg! (Arte Johnson)

  13. Uwe :
    “Do you have any proof”
    Should be on flightglobal:flightblogger’s blog.
    Around the 50% mark. ( including long overdue compensation for
    discontinuing Connexion on Boeings side )

    Please find it. I can’t seem to find the link/source.

    • Nothing about “the 50 percent figure”, but something about Connexion:

      There are just 109 orders for the 747-8: 76 freighters, 20 passenger models from Lufthansa, five from Korean Air and the balance VIPs. The Lufthansa order is understood to have a relationship to Boeing cancellation years ago of its in-flight Internet Connexion service for which Lufthansa was a launch customer and the KAL order is tied up in compensation for late deliveries of the 787 and 747-8F.

      It’s too late for Boeing to do anything but “hang on” with the 747-8. Cancellation would cause too much “collateral damage” to customers.

      Source: Scott Hamilton, GLG group. 😉

      https://www.gplus.com/air-transportation/insight/boeing-7478-problems-continue-likely-more-ahead-50285

  14. Uwe :
    767 versus 787 is correct but the A330 seems to be closer/equal to the 787.

    OEM recommended intervals for systems & internal structure are…

    Single Aisle
    737 – 30 months / 8 years
    A320 – 24 months / 6 years (systems escalated from 20 months to 24 months in September)

    Twin Aisle
    767 – 18 months / 6 years
    A330 – 18 months / 6 years
    777 – 37 months / 8 years
    787 – 36 months / 12 years

    After recent improvements by Airbus to the MPD, the A330 base program is now exactly where the 767 is. It remains behind the 777, and A330 events occur twice as often as for the 787. Yes, individual operators can escalate A330 tasks uniquely within their operation, but operators can do the same with other models as well. The most relevant comparison is the basic OEM recommended maintenance program contained in the MPD, because (generally speaking) this is the baseline for every operator flying the type. Everyone who has the ability escalates within their operation, but this applies equally to all types.

  15. CM: the numbers for the A330 seem not representative. Heavy A330 checks (8C) are done only every 12 yrs.

    “At entry into service, the A330/A340 maintenance program called for A checks every 400 flight hours, C checks every 15 months, intermediate checks at five-year intervals and structural inspections every 10 years. Since then, the intervals have been escalated to A checks at every 600 flight hours, C checks at 18 month intervals, and intermediate checks every six years. Major structural inspections, heavy checks that take five weeks to complete, currently remain at 10 years, but that is expected to change by year-end, according to Colin.

    As part of the maturing of the airframe’s maintenance program, the structural checks will be escalated to 12-year intervals and the light, often one-day A check interval will be increased to 800 flight hours. There also are plans to increase the C check interval to the the 21- to 24-month range.”

    http://www.aviationweek.com/aw/jsp_includes/articlePrint.jsp?storyID=news/A3305158.xml&headLine=A330%20Could%20See%206%%20Dip%20In%20Maintenance%20Costs

    http://edition.pagesuite-professional.co.uk/launch.aspx?referral=other&pnum=68&refresh=6f0H15PiG0b3&EID=97348469-a2bd-46d8-a3fe-ce63a9b26de8&skip=&p=68

    • I appreciate the confusion.

      Airbus has always marketed the first (now 6 year) structural inspection for the A330 and A340 as an “intermediate check”, claiming the airplane does not require a “heavy check” until year 12. This is pure marketing. Airbus differentiates between the two checks because there are some minor differences in what is included in each, with a handful of tasks not reaching their threshold interval until year 12. In reality, both the 6 year and 12 year checks are full “heavy” or “D” checks, because they require equivalent downtime (20-30 days) which is on par with all other aircraft heavy checks. The driver of the downtime is the structural inspection of the fuselage frames and passenger floor, which require full removal of the passenger cabin, including the lavs and galleys, as well as significant systems disruption.

      Airbus marketing folks come in to meet with our E&M folks and claim the A330 heavy check is at 12 years and consistently get ridiculed for it. We’re maintaining A330s and 777s (and previously 767s)… we know how much maintenance is required and when. This is one Airbus claim which has absolutely no credibility with the airlines. It is also why Airbus has stopped claiming an “intermediate check” for the A380 and A350. For those aircraft, Airbus is delivering/claiming

      A380 – internal structural at 6 years.
      A350 – internal structural at 12 years.

      I’m pretty sure the Airbus marketing folks didn’t what to get beat up over this “intermediate check” claim any longer.

    • Thanks for the last links. On page 61 (of the 2nd link), it’s stated that for Lufthansa’s A380s (with a non-composite fuselage), the first overhaul event – heavy maintenance (presumably D-check) – is expected to take place 10 years into service.

      It seems to me that CM may be on a mission to somehow show that maintenance repair & overhaul on Airbus aircraft somehow is supposedly more expensive than what is the case on Boeing equivalent aircraft, and due to supposedly shorter periods between shop visits on Airbus aircraft than Boeing aircraft. Go figure. 😉

      As for MRO on the A320, here’s a 5 year old link:

      Despite revision 28A splitting C check tasks into three groups, many operators still combine these as a generic C check. The content of these checks is different to the C checks under the previous MPD,” explains Ostojic. “This is due to ‘drop out’ tasks, ones that have not been escalated under Revision 28A.” Under the new MPD, the C4 check has an interval of 80 months, which is eight months longer than the six-year structural check. The C8 check has an interval of 160 months, 16 months longer than the 12-year structural check. Since the basic C check has a 6,000FH and 20-month limit, and most airlines will only be able to use about 18 months of this interval, an aircraft completing about 2,800FH per year will have a C- check performed about every 4,200FH. This means that the C4 check will actually come due after about 16,800FH and 72 months, making it convenient to combine it with the six-year structural check. The C8 check will come due after about 34,000FH and 144 months, so it will be convenient to combine it with the 12-year structural check. This compares to a shorter actual C8/D check interval of about nine years and 26,000FH that aircraft have been achieving under the previous MPD. Since Revision 28A is only about a year old, most airlines will still be bridging their aircraft onto new maintenance programmes. Under Revision 28A, the six light C checks in the base-check cycle will include routine inspections and non-routine work arising as a result, cabin cleaning, modifications and service bulletins (SBs). The two heavy checks, the C4 and C8 checks, will include these items, as well as interior refurbishment and stripping and re-painting. The extended interval of the full base-check cycle means that some airlines decide to strip and re-paint at every heavy check.

  16. Not

    OV-099 :
    It seems to me that CM may be on a mission

    Not at all. I just refuse to play the fool to someone’s marketing gimmick. If you’ve been paying attention, you’ll know I play the field equally. Most recently calling out Boeing for presenting unrealistic seat counts in their A321 vs 737-900ER comparisons here on this blog.

    BTW – you do realize the excerpt you have provided supports what I have been saying about Airbus’ “intermediate checks” The article itself calls out “The two heavy checks, the C4 and C8 checks”. As of September, the A320 MPD is now on Revision 32A, and this discrepancy between Airbus marketing and the A320 reality remains unchanged.

    If you’d like some industry data (from three MRO providers) to help make sense of what this all means in terms of a comparison between the A320 and the 737NG, you don’t have to take my word, or accuse me of being on a mission. I’m just interested in the facts…

    “The three programmes collectively demonstrate that the 737NG has lower base maintenance requirements than the A320 family.”

    “The A320 utilises at least 10,000MH more and has higher associated material costs than the 737NG in its first base check. Moreover, the A320 has a shorter cycle interval.”

    http://www.aircraft-commerce.com/sample_articles/sample_articles/maintenance_engineering_2_sample.pdf

    If you have a subscription to Air Commerce, there are similar articles comparing the A330 with 767, A330 with 777 and A330 with 787, all of which confirm what I am telling you about Airbus’ claim of a first heavy check at 10 or 12 years.

    • Thanks to the ever higher reliability of aircraft, due to the increasing reliability of engines and components, which leads to higher mean time between removals and fewer shop visits, fewer MRO hours per flight hour is required for each new generation of aircraft entering into service.

      Claiming, therefore, that the (nearly) state-of-the-art A380, which btw is not grandfathered from an ancient design, but manufactured to the latest safety standard, will supposedly have a shorter cycle (6 years) between shop visits for “heavy” structural maintenance than what is required for the the older 777 (8 years), when Lufthansa Technik says that the the first overhaul event – heavy maintenance – is expected to take place “only” after 10 years into service, would seem too indicate a bias against Airbus products on your part (page 59 in the 2011 MRO Yearbook). 😉

      As for the grandfathered 737NG; on page 76 in the 2011 MRO Yearbook, it’s stated that the good maintainability (on the 737NG) is best reflected in the easy access to the aircraft without specific ground support equipment thanks to its comparatively short landing gear and compact dimensions.

      So, partially due to the low gear, which btw is now more of a liability in the competition vs. the neo, it should not be surprising that the 737NG should be slightly cheaper to maintain than the A320 which require more ground support equipment in the shop (etc.)

      It’s also interesting to note that the non-grandfathered A320 has yet to suffer a hole in the fuselage during flight… 😉

      As for your link to the analysis from 2006 (when comparatively few NGs had even undergone D-checks), interestingly you left out the last part:

      This leaves the issue of what maintenance inputs the aircraft will require in its second base check cycle. Stewart explains that the aircraft will have a small increase in routine tasks in the second cycle, while bigger changes will come in the non-routine element of the checks. The non-routine ratio has been at about 50-100% for the first cycle, and Stewart expects this to climb to 100- 120% for the lesser C checks and to reach about 130% for the heavy check at the end of the second cycle. This will increase the number of MH used in the base check cycle by 5,000-6,000. Additional MH may also be required if the burden of ADs, SBs and modifications grows.

      Finally, at the end of the day, the only “fact” that really matters is if the product is successful in the market place. The sales success of the A320 and the A330 programs would seem to indicate that , at worst, customers are reasonably satisfied with the MRO part as well. 😉

  17. Capacity-wise Lufthansa needs to replace A340-300 and in the long run A340-600. They do not have A330-200. So a B787-8 is too small, a -9 might be OK. But I think they like to keep their standards in their cabin: when you don’t use the 9-abreast on the B787, the capacity shrinks a bit below A340-standards.
    The A350-900/1000 would be a near one-on-one replacement for A340-300/600 and A330-300. The extra range doesn’t hurt.
    With its smaller peers the B787 might be interesting for some markets, especially out of Switzerland, Austria, Belgium. Additionally that will allow flexible sourcing.

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