Feb. 25, 2019, © Leeham News: Even as Boeing put off a decision whether to launch the New Midmarket Aircraft until 2020, next month could be an important milestone—not only for the program but especially for the engine makers.
Unless delayed, engine down-select is supposed to be made in March.
This is a critical decision that could have huge implications to one of the engine OEMs—Rolls-Royce.
In one of the most widely panned corporate decisions in recent memory, Rolls-Royce opted to withdraw from the International Aero Engines consortium, a joint venture that included Pratt & Whitney, RR, MTU and, initially, Japanese Aero Engine Corp and a small Italian company. IAE produced the V2500 (“V” for the Roman numeral five, the original partnership in IAE) engine for the Airbus A320ceo.
As PW moved toward launching the Geared Turbo Fan engine, Airbus wanted IAE to be a partner. IAE produced the core of the V2500. PW’s last attempt at an independently designed engine, the PW6000 for the A318, proved a disaster. Airbus had more confidence in the PW design and RR execution for the GTF than in PW alone.
Rolls nevertheless separated from IAE and with it the lucrative single-aisle transport market. Now it produces only engines for the wide-bodied Boeing 787, Airbus A330ceo/neo, A380 and A350.
We know what has become of the A380. We also know the technical problems of the 787’s Trent 1000 last year and which continue this year. This had a spillover effect to the A330neo.
It’s been an unmitigated disaster for Rolls-Royce.
Rolls is making a big bet on the NMA to broaden its product base. It’s a hugely risky bet.
The market demand is over 20 years is between 2,000 and 2,500 airplanes. (Boeing continues to talk about the “addressable market,” but internally forecasts about 2,500 in actual demand, an insider told me.) Figure Airbus will get about half this market, weighted toward the A321neo powered in part by the GTF—of which RR has no share.
The business case to any of the engine makers on these numbers is already dicey.
Airlines and Boeing would like dual sourcing for the NMA. But half of one half really sticks the knife into a business case.
This is why the engine makers have bene vociferous about saying they see no business case for them. And why, if they do want the contract, it must be sole-source.
For Rolls, the NMA is a path to broaden its product base beyond the large, long-haul wide-bodies for which there is a limited market.
The NMA is also a way for Rolls to try and get back in Boeing’s good graces.
The 787’s Trent 1000 issues severely strained relations with Boeing. Although the grounded airplanes—numbering around 50 at one point and still about 30 at the beginning of this year—are the fault of Rolls, airlines complained Boeing wasn’t doing enough to try and resolve the situation or find airplanes to lease.
For Pratt & Whitney, the NMA is the way back to Boeing.
PW walked away from competing as an engine supplier on the 787 and the 777X. The X was probably a long shot in any event and the market demand for this big airplane certainly didn’t justify dual sourcing.
But taking a pass on the 787 still rankles some at Boeing. Relations with PW haven’t been the same since. (Partnering on the KC-46A tanker, which uses PW engines, apparently didn’t smooth things over.)
There were some within Boeing who wanted to have the GTF as a second choice for the 737 MAX. In the end, GE/CFM made Boeing a sweet commercial terms offer, maintaining its monopoly on the 737.
Boeing then watched as the GTF caused headache after headache for Airbus and on the A320neo. Undoubtedly, Boeing crossed itself in thanks for not putting the GTF on the MAX.
Ironically, the GTF Airbus problems had to do with the engine core and ancillary components and nothing to do with the gear box that is at the heart of the GTF. It was Airbus’ concern over the core that prompted its desire for Rolls to remain part of IAE.
PW doubts the NMA business case and wants sole-sourcing. But with relations with Boeing still poor, it’s an uphill climb.
CFM wants sole-source, it doubts the business case and it wants to keep PW and RR off Boeing airplanes. Betting is that CFM has the inside track simply because of the dominate CFM/GE position on the 7-Series airplanes, for decades.
But it’s this very dominance that drives some within Boeing to seek a change, either by bringing in a second engine supplier or switching entirely to a new sole source OEM.
Boeing salesmen complained for years that given its monopoly position, CFM sometimes doesn’t step up with concessions needed to beat the A320. I know of a few deals in which this was the case. PW stepped up and Airbus won, leaving Boeing salesmen fuming in the process, not at Airbus but at CFM.
Our paywall today discusses some of the commercial terms at stake for the engine OEMs in their quest to win the down-select.
Next month should tell us a lot about how the NMA development will go.