PNAA Day 2: Cautionary note raised

  • Feb. 10, 2016: Today is the second of three days of conference meetings organized by PNAAthe Pacific Northwest Aerospace Alliance (PNAA), in Lynnwood (WA). We’re providing live reporting throughout the three days.

Feb. 10, 2016: Large commercial aircraft deliveries hit just under $104bn in 2015, a 4.9% gain over 2014. Regional aircraft values, however, were just $7.1bn, a decline of 10.5% year-over-year, said Richard Aboulafia, a consultant with the Teal Group.

Deliveries of all aircraft types, including military, rotocraft, etc., saw only a 0.6% increase YOY. Jetliners account for 60% of the total values.

Aboulafia projects, based on supplier data, sees a 13.1% compound annual growth in single aisle deliveries and a 9.4% growth in twin aisle deliveries through 2019.

“If the rest of the world did not exist, I would feel comfortable with that” he said. Aboulafia points to world economic growth as a cautionary data point. Oil prices are categorizewd as red. Product line transitions and supply chain constraints are yellow. Interest rates and exongenous shocks (terrorism, etc.) are other areas of concern.

The fundamentals of the industry are “fine,” and “really solid,” but Aboulafia is worried about the outside factors.

Aboulafia concluded the Boeing has to build the 787 for $91m, including engines, in order to recover its nearly $30bn in deferred production costs and that the Airbus A380 program will be concluded in 2020 absent a reengining program.

He said Boeing’s R&D spending precludes a new middle of the market (MOM) airplane until the next decade (some that is not inconsistent with what Boeing has been saying).

Airbus, on the other hand, has spent more R&D than Boeing (setting aside the extraordinary 787 R&D) and has more cash to spend on developing a MOM than Boeing.

Re-engining has become the preferred choice of customers, Aboulafia said, than the more risky, all-new, high-tech platforms. He thinks new re-engine programs will emerge in 15 years.

The Bombardier CSeries is a good airplane, a welcome addition a a market sector that’s been ignored, he said, but going up against Airbus and Boeing was “an act of extreme foolishness.”

“This is Justin Trudeau’s first crisis, deciding whether to give Bombardier $1bn,” Aboulafia said. Trudeau is the new premier of Canada. “The new management team [at BBD] is infinitely better than what was in place.”

But the CSeries is not in Teal Group’s market forecast, he said.

Aboulafia criticized Rolls-Royce for existing the single aisle market when it sold its share of International Aero Engines to Pratt & Whitney. Hew thought merging the two companies would create a powerhouse competitive with GE Aviation, but questioned whether such merger could take place.




9 Comments on “PNAA Day 2: Cautionary note raised

  1. Richard seems right about most things. The MoM discussion always automatically assumes Boeing as initiative taker. IMO an NSA has a higher priority for Boeing.

    After the A330, Airbus will have a significant gap inbetween A321/22 and A350-900. Where the A300/310 used to be. And a updated, paid for A330 FAL / supply chain/ Chinese completion center.

    An option would be to scale back to an engine/ wing/ wingbox optimized for medium segment requirements.

  2. Oh, he reads my posts. (joke) A few people have been saying for a while that Boeing will be cash strapped and in trouble with NSA/MOM going forward.

  3. Its true that technology doesnt sell – or at a price that you can make money from.

    Look back at the Lockheed Tristar, it was a total cleansheet as they hadnt been in jet airliner manufacturing.
    Autoclave bonding of large fuselage panels- check
    CATIIIB autoland from day one -check
    Advanced 3 shaft high BPR turbofan- check
    Avionics far more advanced than DC-10 or 747-check
    [Takeoff through climb, cruise, descent, landing, and roll out was done without a human hand on the controls was demonstrated]
    Individual self tinting passenger windows( 40 years before 787)-check but not wanted.
    Cockpit paint scheme in choice 3 colours, grey , blue or olive – What were they thinking !

    • :I loved the Tristar. I was trying to save up enough TWA miles for an hour in the airline’s simulator but I ran out of time.

    • Also pitch-smoothing flight control system using it’s spoilers and speed brakes system; Direct Lift Control. And extensive underfloor galley’s / service door. As you state technically innovative but..

  4. I hope the Bombardier C Series will be soon recognized by buyers as to be more economical (20%) then the majority of same size aircraft. And more silent on take off.

    • From a passenger comfort standpoint, I want the C-Series to succeed! As Americans (and other well-fed global citizens) grow bigger, the 737/757 fuselage diameter is increasingly unwelcome for sectors over 2.5 to 3 hours. Particularly as mainline moves to 30 inch pitch.
      I know we’re told all the time that customers demand ever-lower fares, but I don’t believe that. One subset of customers demands that, but they should not drive the PaxEx lowest common denominator.

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