Leeham News and Analysis
There's more to real news than a news release.
Bjorn’s Corner: Bandit mask explained and nonexistent IFE boxes.
By Bjorn Fehrm
2 July 2015, ©. Leeham Co: Having aircraft as your interest exposes you to thousands of photos of your favorite subject. In general I find exterior photos of airliners a bit dull; there is no variation in their configuration or physics except for the livery of the operator. Some photos are a bit extra though. Read more
LEAP, the best of 1,000 investigated alternatives.
By Bjorn Fehrm
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Introduction
June 23, 2015, © Leeham Co. CFM International went through 1,000 iterations before settling on the final design for the LEAP engines that will power the Airbus A320neo, the Boeing 737 MAX and the COMAC C919.
In an interview with us at the Paris Air Show, CFM LEAP program manager Gareth Richards explained the macro process of the development of LEAP, CFM’s sequel to CFM56. This will be the largest turbofan engine program in the history of civil aviation and the follow on to the world’s most-sold turbofan, the CFM56.
Richards focused on how an engine like LEAP gets designed and what the trades are that a single aisle, short haul engine has compared to long haul engines.
LEAP is sharing the A320neo platform with Pratt & Whitney’s GTF but is sole engine on the 737 MAX and the C919. This will lead to engine production rates five years into the program of 1800 engines which is higher than the present rate of CFM56 deliveries.
Dependant on rate increases by Airbus and Boeing, this can increase beyond 2,000 engines per year after the initial ramp. It would make LEAP the largest civil turbofan program whichever way one counts: engines, installed thrust or revenue.
Summary:
- Research of optimal engine cycle was extensive, with more than 1,000 alternatives investigated before settling on the final LEAP cycle.
- The production ramp is the fastest ever, from 30 engines 2015 to 1,700 by 2019.
- While CFM does not want to ramp faster than planned, final production rate is flexible.
- The large volume of sold engines, the fast production ramp and the short-haul cycle makes for a conservative approach to performance.
- We discuss with Richards how such a program is managed and how you make sure you can deliver on promises.
ExIm Bank expires, Boeing, hundreds more hope for a Lazarus
July 1, 2015, c. Leeham Co. The ExIm Bank is dead.
At least for now.
Click on image to enlarge.
Boeing, and hundreds of smaller companies, hope for a Lazarus miracle. Though nobody expects a revival of the Bank in four days, as in the Bible, they think resurrection is possible this month.
“There is a strong majority in the House and the Senate to reauthorize ExIm,” Tim Neale, Boeing’s Washington (DC) spokesman, told us Monday. “The problem is getting a Bill to the floor.” The Bill has been bottled up in committees, where Republicans/Tea Party members are chairmen and opposed to renewing the Bank.
Cost cuts remains priority, challenge at Boeing
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Introduction
Dennis Muilenburg, president and CEO of The Boeing Co., from July 1. Photo via Google images.
June 29, 2015, © Leeham Co. Cost control is going to be one of the top priorities of Dennis Muilenburg, the new chief executive officer of The Boeing Co.
Muilenburg, the president and chief operating officer for the past 18 months, was named last Tuesday CEO. Current chairman and CEO Jim McNerney relinquishes the latter title on July 1 but remains chairman.
We outlined many of the challenges Muilenburg faces as CEO in this post from January. Now that it’s official, an update is in order.
Summary
- Deferred production costs on the 787 continue to weigh down the company.
- Pricing pressure from the Airbus A330neo add to the 787’s woes.
- Production gaps for the 747-8, despite the announcement last week to lower rates from 15/yr to 12/yr in March next year, and the 777 Classic remain a major concern.
- The 737-9 MAX is failing to contribute its share to support profits and Free Cash Flow (FCF).
- Pressure to sell the 777 Classic is lowering prices, profits and cash flow on this line.
- Boeing’s commitment to huge stock buybacks for shareholders requires strategies to boost cash flow.
Pontifications: Passenger experience and the WOW factor
By Scott Hamilton
June 29, 2015, © Leeham Co. Back on June 1, I wrote in this column I had yet to experience traveling on the Airbus A380, which entered service in 2007. The A380 doesn’t serve Seattle, where I live, and I really didn’t have a desire to add hours and a connection to my travels just to fly the A380 if I could go non-stop. Note that this is precisely the argument advanced by Boeing, but this is a coincidence. I have yet to fly on the Boeing 787, either, and it does fly into Seattle from Asia.
A reader Tweeted to me his incredulity that in all these years I hadn’t flown the A380. I replied, All in good time. I knew when I wrote that I would be returning from the Paris Air Show on an A380 via Los Angeles. The time had come for me to experience the airplane. (Interestingly, Dominic Gates of The Seattle Times, unbeknownst to either of us, wrote he’s doing the same thing via New York on Air France. I would be flying Air France. Friends warned me that the passenger experience on Air France, however, was hardly what the A380 is all about.
They weren’t kidding.
I had been on the test A380 during static displays before, but never in a passenger-configured model. At the PAS, Qatar Airways had its own little air show, displaying more airliners than any OEM: the A319, A320, A350 and A380 plus the 787. The A350 and A380 were open to the press. As with anyone in the industry, I had long-heard of how the Middle Eastern airlines went over the top on outfitting their cabins, but I wasn’t remotely prepared for the Qatar A380. Walking on board, into the first class section, was a jaw-dropping “wow” moment.
Embraer CEO talks about risks
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Introduction
Embraer CEO Paulo Cesar Silva. Photo: AINOnline via Google Images.
June 22, 2015, Paris Air Show, © Leeham Co. Embraer has emerged as the#3 commercial aircraft producer over the years, behind Airbus and Boeing and overtaking Bombardier, by approaching risks carefully and conservatively. No other decision in recent years reflects this approach than what to do when events outside its control forced officials to decide what to do about the future of the E-Jet.
Bombardier launched the CSeries with a new design and a new engine. The larger of two models, the CS300, was a direct challenge to Airbus and Boeing and their smallest aircraft. Airbus responded with the New Engine Option family, forcing Boeing to react with the re-engined 737, the MAX.
With the smallest CSeries, the CS100, a competitor to the largest EJets, the E190 and E195, Embarer had to do something. The question was what.
Embraer could launch an entirely new, larger aircraft, following the Bombardier example. It could do a “simple” re-engine of the EJet. Or it could do something else.
Officials chose to stay away from confronting Airbus and Boeing with a CS-300-sized EJet. Instead, they drew the line at 133 seats in highest density, adding 12 seats to the E-195. The Pratt & Whitney GTF was chosen to power a fundamentally new airplane, one with new wings, new systems, aerodynamic upgrades and other improvements.
We met with CEO Paulo Cesar de Souza e Silva at the Paris Air Show to talk about EMB’s approach to global risk factors.
Summary
- Oil prices, over-ordering and over-expansion by airlines factor into Embraer’s market assessments.
- Airline focus on market share rather than profitability is bad decision-making.
- Asia is Embraer’s best opportunities today.
Pontifications: Final thoughts of the Paris Air Show
- Our interview during the Paris Air Show with Tom Williams, president and COO of Airbus Commercial, is now open to all Readers. Williams discussions production, supply chain issues, launch aid for the potential A380neo and more.
By Scott Hamilton
June 22, 2015, c. Leeham Co. The Paris Air Show was largely as expected, with a few small surprises. Boeing did better than expected via-a-vis Airbus, actually leading slightly in firm orders and tied in orders-and-options going into Thursday. This is virtually never the case, particularly at the Paris Air Show, Airbus’ “home” turf. At the same time, some Wall Street analysts noted the firm orders fell below expectations. I’m not especially concerned about whether an announcement was firm or a commitment, because the latter typically firm up, if not within the current calendar year then usually in the next. Note, for example, Boeing announced the launch of the 777X program at the 2013 Dubai Air Show was some 200 commitments, or thereabouts, but the orders didn’t firm until 2014. Airbus announced a commitment for 250 A320s from Indigo in 2014 and it will likely be firmed up this year.
Airbus wraps up Paris Air Show 2015
June 18, 2015, c. Leeham Co: Airbus traditionally wraps up the Paris Airshow with a Thursday review of their orders during the week. We have the major events captured in pictures, describing what was announced during the week. Boeing does not end the air show with a similar event.
Airbus President and CEO, Fabrice Brégier, opened the wrap up by saying that he was perhaps a little to conservative in the first briefing Monday where he said that he expected Airbus to book “a couple of hundred orders” during the show. In the end it became 421 orders/commitments, the fourth best result during air shows in Airbus history.
Odds and Ends from Paris Air Show
- A350-1100, A380neo
- A350-900, 787-10 thrust issues
June 18, 2015: The industrial part of the Paris Air Show is over, and here are some closing odds and ends.
We may have some more next week when we decompress.
A350-1100 and A380neo
The prospect of an Airbus A380neo was one of the top topics this week. Airbus suggested a neo might include a modest stretch, which was the only piece of new information about the neo topic in the public press conferences. We have more on this after this….
The Wall Street Journal reported that Airbus is talking with customers about the prospect of a stretch of the Airbus A350-1000, commonly referred to as the A350-1100. The Seattle Times reported there are no customer talks (link not available-we used up our free access, but you could search The Times).
We asked John Leahy, chief operating officer-customers of Airbus about the A380neo and the -1100 on the sidelines of the closing Air Show press conference:
Airbus wins hot Wizz competition: 110 A321neos and with it the Paris Air Show
- Deal signed 10 minutes before press conference
- Boeing loses out in aggressive bid for 737 MAX 200
- Last minute deal gives Airbus PAS win over Boeing
June 18, 2015, Paris Air Show: It was one of the most hotly contested campaigns in Europe, for a triple-digit order from the Hungarian low
Airbus super-salesman pulled one of his famous rabbits out of the hat at the last minute to win a crucial competition over Boeing and with it, bragging rights over Boeing at the 2015 Paris Air Show. Photo via Google images.
cost carrier, Wizz, for either the Boeing 737 MAX 200 or the Airbus A320 family.
For Boeing, a win was sorely needed for a second customer for the 737 MAX 200. It would also mean displacing Airbus as the incumbent supplier to Wizz.
For Airbus, it didn’t want to be displaced and winning this deal would increase the A320neo family lead over the MAX and keep a thumb on the MAX 200.
In a deal signed just 10 minutes before the scheduled press conference of a “customer announcement,” Airbus won and Boeing lost.