Odds and Ends: UBS on wide-bodies; CFM on GTF; Analysts on CSeries; Expedia on LCCs

UBS on wide-bodies: Investment bank UBS sees the Airbus A330ceo deliveries  dropping from the current production 10/mo to 5/mo by 2017, in advance of the introduction of the A330neo late that year. As Airbus transitions from the ceo to the neo, beginning in earnest in 2018, UBS sees deliveries dipping to just 40. The forecast doesn’t yet go beyond 2018.

Likewise, analysis David Strauss sees the Boeing 777 Classic deliveries declining from the current production rate of 8.3/mo to 5/mo by 2017, well in advance of the 2020 entry-into-service of the 777X replacement. He sees Classic deliveries holding at 60/yr in 2018.

Strauss sees 12 Boeing 747 deliveries per year beginning in 2016 through the forecast period in 2018, implying a rate reduction from 1.5/mo to 1/mo.

CFM on GTF: The head of CFM International’s technology told a conference that CFM looked at Geared Turbo Fan technology when evaluating proceeding with what became the LEAP engine and decided to take a pass.

Speaking at the Morgan Stanley conference, Reuters reports that chief technology officer Mark Little said CFM shied away from the GTF over weight and reliability concerns. But he didn’t rule out using a GTF for some future engine, according to Reuters.

Analysts on CSeries: Bloomberg reports that an increasing number of aerospace analysts and consultants believe the entry-into-service of the Bombardier CSeries will slip from 2H2015 into 2016.

We’ve previously reported that we now have the CSeries EIS slipping into 1Q2016.

Bombardier continues to press ahead for a 2H2015 EIS (which, at best, we believe is 4Q2015)

Expedia on LCCs: Airline booking company Expedia conducted a survey on Low Cost Carriers and among the results: legroom is important.

Considering the recent news items about legroom and recline wars, and Ryanair’s order for the Boeing 737 MAX 200, the survey results are worth a look.

14 Comments on “Odds and Ends: UBS on wide-bodies; CFM on GTF; Analysts on CSeries; Expedia on LCCs

  1. About A330 CEO prospects, lessors seem to be more optimistic than UBS according to this Flightglobal article :
    http://www.flightglobal.com/news/articles/lessors-optimistic-about-a330-39ceo39-longer-term-403682/
    They think that the A330 CEO is still very attractive for dense short to medium routes notably in Asia.

    By the way, about commercial prospects, the ATR boss is very optimistic in this interview (in french, sorry) : http://www.latribune.fr/entreprises-finance/industrie/aeronautique-defense/20140915trib000848901/atr-peut-vendre-plus-de-1.700-avions-dans-les-15-prochaines-annees-patrick-de-castelbajac.html

    ATR hopes to sell 1700 airplanes in the next 15 years (already 144 airplanes sold this year). With their 80 % market share, they are in a pretty good situation. No rush for the 90 seats, competitors (Bombardier and the chinese) are not ready to launch such a plane.

  2. CFM may have made the decision not to go the GTF route for the LEAP (probably not as mature as PW technology) but I can guarantee they will have to go that way for their next engine. With ever increasing by-pass ratios and the revised architecture transitioning from a low work to a high work low pressure compressor, trades conducted by NASA and publicly released engine company studies show that the scaling a engine to a larger by-pass ratio for better SFC has better weight growth for a GTF versus a direct drive engine. Keeping in mind that these studies are theoretical the proof will come when GTF technology can perform reliably out in the field and real-world test data validate this road map.

    http://ntrs.nasa.gov/archive/nasa/casi.ntrs.nasa.gov/20110004165.pdf
    http://ntrs.nasa.gov/archive/nasa/casi.ntrs.nasa.gov/20090035613.pdf

    • PW had a headstart on the GTF program and already had a lot of test data while CFM wasn’t quite ready for it when they were required to offer their new engines. With RR’s UltraFan, we have 2 out of the 3 major engine makers endorsing the GTF technology as the future of high bypass ratio engines.

        • One can argue that GE was quite time constrained as they came fresh off the 77W development and then had to focus on their GEnx development. They then had to move quickly into the narrowbody re-engine programs. PW had nothing else in the works in that timeframe (apart from the F135) so had all the time in the world to experiment with and fine-tune the GTF technology.

  3. One thing that stuck out to me about the NEO is that it isn’t conducive for an airline who my experience growth over the course of the lease or purchase since there is no increase in capacity . I understand that it’s just an re engine and some wing modifications.

    • According to the NEO presentation by John Leahy made at Farnborough Air Show 10 additional seats are available due to “Space-Flex” or “Smart Lav”. These seats may be also available on CEOs.

      An airline may switch from A330-200 to A330-900 or from A330-300 to A350-1000/A380 in case they want to add more seats.

  4. No one following the CSeries development closely can believe that it will start flying revenue at any time in 2015.

    Anyway, no one who has followed the programme since its inception can believe anymore what Bombardier says about anything. It’s all BS (Bombardier Spin). 😉 Or if you prefer: BCB (Bombardier Corporate Baloney).

    We don’t even know when FTV1 will return to flight after being repaired, and we won’t find out until it ACTUALLY starts flying again.

    Bombardier’s PR strategy seems to have been inspired by the British Royalty: Never complain. Never explain.

    The only positive thing that will come out of all this is that it will give Bombardier more time to garner the 300 firm orders they are aiming at before EIS. 🙁

  5. Dear Leeham News: In your estimation, is a production rate of the 747-8 at 12 per year feasible? In the year 2013, delivering 24 frames, the 747 program added $262 million to deferred production costs; and in 1H2014, delivering 6 frames, the 747 program added $202 million to deferred production costs and $13 million to unamortized tooling costs. It seems like decreasing the production rate comes with a disproportionately great affect on profitability.

    • Toward the end the 744 was at a rate of 1/mo, so it’s feasible, yes. The financial implications are another matter. We’ve been told that contracts with suppliers are set at a minimum rate of 1.5/mo, so there could very well be a charge if this is correct and Boeing goes to 1/mo.

      • The 744 had a pretty good run ahead of going down to 1/month.
        The 748 never went much beyond it. The 748 production inherits rather significant cost overruns from the “get ready for sales” times.
        No time to reduce cost by way of a learning curve.
        A simplistic interpretation would be that just having the line going takes $100..200m a year?

  6. If GE had opted for the GTF-option, they would have been no way how Boeing could have modified the B737 with it. The GTF-option married with the advanced hot section of the Leap-1 might be the engine of choice for a future Boeing Single Aisle, which is positioned above the B737 (both in range-payload, and in ground clearance ;-)).

    Wide-body rates: I doubt that either Airbus or Boeing are making much profit on the late A330 or B777. So, a drop in output might result in less turnover, but without a major impact on actual earnings. Airbus (and likewise Boeing) can shift workers between programs, and redirect resources to programs early in their learning phase. A350XWB will be at MSN150+ in 2017, hence half way out of the woods.
    the more interesting fact than output are actual prices versus actual cost, and I would consider the A380 being bad and the B747 mimics the Being of Inconceivable Horror.

  7. 20%, and growing, of Easyjet’s traffic comes from business travelers. They buy tickets closer to flight time and therefore at a higher price. They are more likely to pay for extras such as Speedy Boarding. Also with a saturated leisure market, poaching business travelers from legacy carriers is the easiest way to grow.

    Easyjet has very tight legroom, tighter than Ryanair currently.

    http://www.businesstraveller.com/news/100510/easyjet-sees-44-percent-jump-in-business-travel

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