Transformations for the Big Four OEMs, manufacturing

Jan. 24, 2018, © Leeham Co.: Dublin, Ireland: Even as new airplane programs are winding down at the Big Four OEMs, 2018 will be a year of transformation for the commercial aerospace industry, LNC told an audience at the 2018 Airfinance Journal Conference in Dublin yesterday.

Airbus is wrapping up its A320neo family program. The last model, the A319neo, will enter service this year.

Boeing’s 737 MAX family is progressing. The MAX 9 enters service this year, followed by the MAX 7 next year. The MAX 200 EIS is also in 2019 and the MAX 10 EIS is in 2020.

The Boeing 787-10 was certified by the Federal Aviation Administration this week. It enters service this year, the last of the 787 models.

The 777X is two years away from EIS.

Bombardier, Embraer

Bombardier’s C Series twins have entered service. Embraer’s E2 family enters service this year with the E190-E2 followed by the E195-E2 next year. The E175-E2’s future depends on relief of the US labor union Scope clauses; EIS is currently slated for 2021.

But there will be important transformations this year despite the dearth of new airplane programs.


Airbus and Bombardier are working toward closing the deal announced last year in which the former took a 50.01% stake in the C Series limited partnership BBD created during the bailout of the program.

The deal is undergoing anti-trust review through a host of regulators in a variety of countries. Approval is expected, though Brazil is one of the countries that must review the transaction. Given Brazil’s complaint with the World Trade Organization and the direct competitiveness of Embraer to the C Series, how Brazil views the deal will be of more than passing interest.

The assumption is that the transaction will close this year. This gives Airbus a solid product line from the 100-seat CS100 through the 800-seat A380.

The larger CS300 is the same size as the A319neo, but with better economics. Airbus sold only 55 A319neos and 19 of these went away last week when Frontier Airlines swapped them for the larger A319neo. If there is a future for the 319 in its present form, it’s only as an Airbus Corporate Jet.

The CS100 and the 130-seat CS300, cover a segment that Boeing does not.

Boeing and Embraer

The 737-7 MAX has an estimated 63 sales (or 58, if a report Jetlines of Canada cancelled). Its future as an airliner is in doubt.

Southwest Airlines, the largest customer with an order for 30, will take seven of the orders next year. But it deferred 23 until 2023-24, and an up-gauging to the larger 737-8 seems likely. The MAX 7’s future seems to be more with the BBJ and military than  it does with airlines.

A proposed combination with Embraer will be a major transformation, if the Brazilian government approves. This will give Boeing the EJet family, but a gap still will remain between the 120-sest (two-class) E195-E2 and the 168-seat 737-8.

The important part of this combination seems less the airplanes and more the Embraer resources, mainly engineers and low-cost production facilities and know-how.

With a decision looming by Boeing whether to proceed with the New Midmarket Airplane (NMA), and more than  5,500 Boeing engineers and technicians reaching retirement age in the next 5-10 years, Embraer’s engineers will be idle with the wind-down of the E2 program. Their expertise on the NMA will be welcome.

Manufacturing transformation

As important as the consolidation among the Big Four OEMs is, the transformation in manufacturing is more so.

In addition to Boeing facing retirement of 5,500 engineers and techies, its touch-labor workforce is similarly aging. Automation, 3D printing, additive manufacturing and step-changes in manufacturing is required to replace the white- and blue-collar workers, meeting rising production targets and dramatically cut costs. In addition, price competition between Airbus and Boeing is as fierce as ever.

Some of these new manufacturing techniques are being implemented already by Boeing and increasing on the 777X. Industrial suppliers to Airbus and Boeing are moving toward these advanced techniques. Bombardier’s wing plant in Belfast is one of the most advanced in the world.

Transformation Conference

Airfinance Journal and LNC have organized a major conference June 25-27 in Mobile (AL) that will focus on this manufacturing transformation. Information may be found here.

49 Comments on “Transformations for the Big Four OEMs, manufacturing

  1. Will the MAX200 happen? Start reading more and more about complaints of the bathroom sizes on the MAX8. But maybe Ryanair will deploy these on short (<2 Hour) high density routes where bathrooms are not a big issue?

    • @Anton: Ha! Michael O’Leary probably be happy to replace the loos with seats anyway….

      • That crossed my mind. Was just wondering if an MAX9 is not an alternative between the MAX200 and 737-10.

    • LH’s NEO bathrooms are really tiny as well, if there’s no choice, expect more trains PAX.

      • The train thing is happening. I love flying but the costs getting to and from airports, security checks, weather delays, frequencies, etc. makes me catching a trian in Europe more than flying.

        • Off peak Eurostar London-Paris gets down to 50 something pounds, allows 10 to get to and from the airport and that means flights need to be under 40 to compete on price alone, forget about comfort, that’s a lost cause. Hard to make money at those prices. Lots o Pax will be people who can’t go through UK immigration, LH/AF/KL don’t even have that in their favor.

          • Another non-quantifying variable is whats happening when hanging around an airport with a family could cost you, food, shops, the lot. With a train its get on and move onto your destination.

    • @Anton:
      “Will the MAX200 happen?”
      1st of all, we all know it’s just a hi-den config Max8 with a fancy mkting name but really no diff than a hi-den, SpaceFlex equipped 320Neo. 2ndly, LionAir, FR, Norwegian and VietJet alone(each ordered @ least Max8 x100) will ensure it happens.

      “Start reading more and more about complaints of the bathroom sizes on the MAX8.”
      Good suggestion. Though I admit I hv never read about/came across such complaints yet.

      Another suggestion:
      “Start reading more and more about complaints of the bathroom sizes on the” Airbus SpaceFlex lav design now widely adopted by 320Ceo/Neo operators(not just LCCs) for deliveries in recent yrs.

      See for yourself(just google it but I’ve already seen/used it in person). It’s really tiny….especially in comparison with the smallest lav type available on a 737NG/Max and even an older 320Ceo family.

          • Its a modification of the MAX8 that will cost money. Not sure if the MAX9 has the extra door?

          • Another one for you, shrink the 321ACF by 3-4m and you could have MAX8/9/200 eater.

          • @Anton:
            “…shrink the 321ACF by 3-4m and you could have MAX8/9/200 eater.”
            I’m guessing U hv 2 objectives re the above comment:
            1. Waste Airbus development $(as usual re your ideas about how to tweak Airbus products).
            2. Render the 320Neo irrelevant because hi-den config 320Neo with ACF set-up is already certified to carry upto 195pax and on sale for yrs.
            3. Deflect attention fm your original campaign to try to criticize the Max200 on lav size which subsequently failed/backfired on your sacred cow 320 because U didn’t checked(though unsurprising because U believe nothing bad can ever be associated with this type) hi-den 320/321Neo with ACF is actually even worse in that regard.

          • Think you missing something, it could potential seat ~20o with bigger and one extra “bathroom” in it and fly 3500Nm.

          • Lastly, an A320.5 X-cabin could use the standard rear galley and bathrooms, 321ACF’s door no3 removed but use two activated over wing doors and still have around 200 seats?

      • Just lose weight and shut up (US+some Germans).
        Avoid milk and corn fed Minnesotans 🙂
        Most Europeans are tiny anyhow since the french lost all their tall guys when they took Moscow (a while ago obviously…). So cram’em up. Europeans are used to obey govs without complaining much. Happens in their daily lives.

        So it should work. lol.

        ps: i took one of those really really crammed EU LCCs a few months ago to meet with a customer on a 1/2 day’s notice. Wow. In the US, LCC are still bigger by far!! My wife convinced me once on Spirit. OMG. I think being Irish is now a bad word to me. Sorry. WTF. I hope they fail 🙁 (one day). Though i know this instant wish won’t be granted.

        Hopefully Scott does not ban me for ranting.

        • Seems people are having a bad day today?

          Must agree European LLC seat pitch not OK. In my simple mind say a ticket cost $50 at 29″ pitch why not make it 32″/29×50=$60, that includes compensation for luggage check-in losses (LCC’s bread and butter).

          They will also save around 10% on pax and luggage weight and planes will be full.

          • Sorry @Anton, yes, bored on an EU to US flight. This 2ku band internet is quite nice though. $ is ok. So not an entirely bad day. Apologies for the rant (though i will never ever ever take R. Air again… the smell/mass behavior/staff totally unmotivated… i thought i was back ‘home’ in 3rd world countries).

            B and A are really dependent on new 10% more efficient engines in class. So what next for them? Air frames in themselves obviously do not warrant a new program — the other 5% in 15% material gain programs.

            Sure you can invent a NMA market. But at the end it’s the engine that makes or break it. So can they squeeze enough efficiencies to justify a new airplane? Perhaps the Neo/Max gains can be brought to the wider cabins but the $math is going to get awfully close. The engines prime. The wing is far second in the calculus. Composite 3rd.

            So what do you do with the design capabilities? In the US, we fire them cyclically. Share buy backs are more important. In Europe, they socialize them so others pay for them.
            But it’s a good question:

            -Big data all around?
            -End to end digitalization? — really, that’s instrumentation for big data (my broad area)
            -Disruptive innovations such as personal/Uber/etc. planes? After all they know about certification/security like almost no other.
            – Mach 2 airplanes? No way this scale into significant $.
            – New aerodynamics…. i do not see that as this is again dependent on the engine makers for a step change
            – Manufacturing/certification capabilities for widely customizable air frames (wing shape,barrels, etc) for finely targeted airplane efficiencies within an airplane family (Max 8.1, 8.2, 8.3…9.1, 9.2…? Can this be designed/certified/built cheap enough? That could be really interesting. But do the customers have the sophistication to handle true platforms like this? This is really about the last few % gains. But these are material still in my experience. But how about resell value?

            What else can they do with their design/certification know how?

          • One thing dawned on me a while ago, OEM’s come up with CFRP’s, fancy wings, etc. But the big strides are made by the engine manufacturers.

            Hang ultrafans on a standard “old” 767 or 757 and seat mile cost will most likely be not many miles behind that of the NMA?

          • That’s probably the 50th post, where someone suggests the 767 with newer engines would be a good idea.

            A few things to keep in mind:
            Production costs of the 767 are relatively high (it is said the larger A330 costs less to produce than the 767).
            The 767 wing probably needs to be updated/redesigned.
            7 a breast (2-3-2) is far from optimal.

            A 767 NEO would still strugle or have limited succes. Not sure that warrants funding. Though it would beat another round of share-buy-back.

          • The point I wanted to make is that improvements in fuel consumption is mainly the result of engine improvements and not in aircraft design.

            Boeing unlikely to directly money with an 7673ER-MAX but it will take sales away from Airbus.

      • The spaceflex lav is horrible. I preference away from A32X planes just to not have to deal with this especially if the flight is longer. Who thought a seat and a half width against a curved fuselage was acceptable? Plus there is zero room in back so if the flight attendants need to use the galley everyone standing needs to move around constantly. Delta’s refurb A32x interiors feel extremely cramped as a result, moreso than any other jet in my recent memory.

        • Is the ACF now standard or is the “old” cabin l
          layout still available as an option?

          The rear galley layout is a mess.

    • If there is an Boeing-Embraer deal hope Canada is one of the countries that is on the review list.

  2. If the anti-trust review (Brazil) stops the AB-CS deal it could be another victory for Boeing (and Embraer).

    Things could still get “ugly” on this front during the next year.

    • I believe they can only stop it in Brazil.

      How much of a market loss that would be?

      • More complicated than that. But at some point is Brazil (or any country) become unreasonable according to some eco. parameters, the WTO has rules against that and the country looses the ability to have a say in the next deal. Not something to be taken lightly.

        But i cannot find the rules handily.

    • RR has another crisis on its hands with blade failures on the Trent 1000.

      The new 10 smoke badly in some modes.

      It sounds like they have too much on their plate.

      • The RR Trent 7000 is a version of the T1000-TEN, it has some emissions dispensation on early deliveries but structurally is a big step forward. Hence the A330-neo should not be effected by the same T1000 life problems. RR will swap out Norwegian 787-9’s T1000 engines to TEN versions most likely increase the spare engine pool. All new deliveries are RR T1000-TEN.

        • Not sure there is such a thing as ‘spare engine pool’ as different parts of a particular engine have different lives. So if you are breaking turbine blades, thats the section that will be replaced, while the rest of engine remains the same.

          • When RR get hands on more spare engines (that they refubish at the correct time) makes spares available for customers needing a T1000 engine change to keep them flying. This types of campaigns is quite common thru jet engine history and can be really stressful when a big fleet is effected and aircraft after aircraft is grounded. PWA had its share on the PW1100G’s in India recently.

  3. Without a doubt, the Airbus-Bombardier and Boeing-Embraer alliances will be common talk amongst us very soon. Economically it makes perfect sense. All parties win. Collaboration and synergy is the only way to capitalize on current and future opportunities. Now, lets hope labor unions will draw the same conclusion.

    • I have yet to see Boeing do anything that is a benefit its employees.

      Killing their jobs in one state and opening them up in another at a far lower salary come to mind.

      On the other hand their is an active effort to eliminate the union.

      So not its not going to be taken well.

      Boeing working well with Embraer looks like oil and vinegar dressing.

      • Inspired by new USA Government tax plan, I thought all Boeing employees were given $500 gift cards to WMT, that is in lieu of pay raises.

      • As aircraft deliveries rise as well as manhr costs increase, automation will increase in aircraft parts fabrication and aircraft assembly. Just compare how many robots there are in high volume luxuary car production. Now the latest aerospace structures are made with ATL machines + autoclave or out of autoclave fabrication with robotic drilling and robotic friction stirr welding. Interchangable boxes are on the ARINC internet. The main staff numbers will not be in production but in services, engineering, purchasing, controlling and education. Soon airlines will change the cabin with seating, IFE, colors and fabrics every year requiring tons of staff pulling out the old and installing the new and get all the software in the cabin working. The airlines might not even own the interiors just lease it for 1-2 years then have it replaced and the lease company sell it to other airlines or owners of home movie studios wanting 2-3 rows of biz class or first class at home in front of the big screen. I am sure thre are buyers for Ethiads Residences when they are pulled out and replaced with something even more fancy.

  4. My mind is getting pretty twisted with the reference to the Embraer engineers being a benefit on the NMA.

    First, this is in no way a slam at the Brazillian engineers, its a real world aspect. I have worked with far too many people of diverse cultures and backgrounds who were top notch in their fields to have a prejudice.

    We are talking about two totally different corporate cultures to start with as well as the cultural itself.

    Embraer has very little experience with large aircraft, let alone what Boeing has done and expect to implement with their in house tech.

    The NMA has been developed in essentially a total vacuum from Embraer.

    The reports were that Boeing let a lot of work on the very conventional 747-8 to the Russian design center, and that had to be redone in Everett as it was messed up.

    Design system are going to be different.

    I can see Embraer being responsible for a real C series competitor, I don’t see them contribution to the NMA.

    • Although in its early stages, the KC-390 has a 737-size fuselage with a 767 diameter.

    • Boeing might have Embraer design the NSA with thousands of Boeing cost controllers checking every rivet cost, CFRP carbon ply and every box purchased from Honeywell or similar making sure the certified aircraft delivers massive profits like the 737. There is no reason the NSA and MoM can not share databus, cockpit systems and 90% of boxes. Just like the intentions of the 757/767 parallell projects. It can be the 7E7 and 797 projects.

    • I can imagine a JV where EMB design and build the 737 replacement, and BA just sell and support it. Sort of like the KC-390. Leaves BA free to concentrate on WBs and scaling down. Hard to see Brasil gov letting go. Esp due to defense consideraciones.

      • ‘Design and build’ ? That leaves too much power in a suppliers hands. They might do a marketing tie up like Airbus, but without a FAL for the E2-195.

        • I mean the NSA might be a completely EMB product, like the 390 is, just soldados by BA. With current political climate in the US it will be hard to get engineers to move to the US to do the NSA there, so it might have to be a purely EMB aircraft. Remember, EMB’s people are probably well paid and quite confortable in Brasil. si

        • @dukeofurl:
          “‘Design and build’ ? That leaves too much power in a suppliers hands.”
          May be but there are precedents re Boeing program:
          See Exhibit A known as Boeing 787 particularly re the degree of contribution/risk-sharing by MHI, FHI, KHI, Spirit, KoreanAir Engineering(e.g. those fancy wingtips), etc., etc.

          Unlike EMB, none of these partners has ever tried to do final assembly of an airliner except of course MHI.

  5. The other question is: What impact will these future alliances have on Comac (ARJ), Mitsubishi (MRJ), and Sukhoi (S)? Will they survive the marketplace?

    • I think Mitsubishi can be the dark horse. Japan has manufacturing expertise to make stuff that work and are cost effective. They are rookies in commercial airlines but soon they will be were Honda is now in small biz jets. The MRJ is their Dreamliner with misstakes that cost but the mother company have cashflow to pay as you go (just like Boeing) and still pay good dividents. They might need a new IHI 35k engine to fit a new robot built CFRP and Al-Li 200pax airline to take the next step.

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