Odds and Ends: A350 EIS; A330neo; more on 757RS

A350 EIS: Bloomberg reports that the first Airbus A350 XWB could be delivered to launch customer Qatar Airways “before the December deadline.” According to the Ascend data base, the first delivery had been planned for July and then slipped to September and then October. Airbus later said November or December. Based on this movement and market intelligence, we had slipped EIS to early 2015. In the end, we’ll see where the date lands.

A330neo: Aspire Aviation reports that Hawaiian Airlines could be an early customer for the A330neo. The prospect makes sense: HA is a hold-out for converting its A350-800 order to the larger A350-900, preferring the capacity of the smaller airplane.

757 Replacement: News out of the Singapore Air Show about the prospect of a 757 replacement continues to pick up steam. This story in the Puget Sound Business Journal is as complete as any (besides which, it also quotes us and our stories).

Competing in Asia: CNN has a profile of the competition between Airbus and Boeing in Asia for the low cost carriers.

Guest column: envisioning the next round of airplanes

By James N. Krebs

Leeham News recently forecast that the next all new Boeing airplane will be a 757 successor with an entry-into-service around 2025, followed by a smaller NSA (New Small Airplane), a 737 MAX/A320 neo successor, in maybe 2027. I believe it will be clear in the next few years that the technology is and can be available here to build a reasonable-risk NSA with 20% fuel savings over the MAXes/ neos (at same seats) for initial service by 2025 (which will demand perhaps 40 more than 162 seats for even better economics). Its production would ramp up over ~5 years or so.

I hope this would be mainly a “Made in the USA” Boeing NSA: American engineering, American manufacturing, American jobs and American competitive edge. If that takes some helpful brainpower and/or investments from NASA, Northrop Grumman, Lockheed Martin, etc, good.

Boeing and Airbus might love to build a combined 100/mo. MAXes and neos “forever,” but technology and market forces aren’t likely to permit this. The companies won’t want to whet any appetites soon but I hope Boeing’s advanced design people are already at work–I’d be disappointed if they aren’t.

Airbus could certainly put an A320neo successor in service 10 years after their 2015 neo. A reengined A330 and a possible A350-1100 aren’t the only new projects they are capable of in the next decade.  The market response to their A320neo family completely surprised Boeing a couple years ago. What’s next?

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Rolls-Royce Trent engines program update at PNAA conference

Bill Boyd, senior vice president of Rolls-Royce, provided a program update of its Trent engines that are being developed for the Airbus A350 XWB. He appeared on a panel with GE Aviation and Pratt & Whitney. He appeared at the 2014 Pacific Northwest Aerospace Alliance conference last week in the Seattle area.

Sound is soft; use of headphones is recommended.

http://www.youtube.com/watch?v=5Ps_BuG1_JQ

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http://www.youtube.com/watch?v=Y2Lgs-oGJYg

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http://www.youtube.com/watch?v=Euo3TJZlQyc

A350 XWB program update at the PNAA conference

Daniel Wenninger, senior director of the Airbus A350 XWB program out if the Airbus Americas office, appeared at the 2014 Pacific Northwest Aerospace Alliance conference last week in the Seattle area.

http://www.youtube.com/watch?v=8RdszdH0egE

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[youtube=http://www.youtube.com/watch?v=QMyM5NLu3V8]

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[youtube=http://www.youtube.com/watch?v=1YNb0UFKiMw]

Simon Pickup of Airbus Americas joins Wenninger for questions and answers.

[youtube=http://www.youtube.com/watch?v=eMtO4AfpZB4]

Development of the GE9X for the Boeing 777X

Jason Brewer, general manager of GE Commercial Engines Marketing, appeared at last week’s Pacific Northwest Aerospace Alliance 2014 conference on the Big Engines panel.

Brewer discussed the development of the GE9X for the Boeing 777X, outlining the new technology going into this big engine for Boeing’s latest 7-Series aircraft.

One slide–which is available to the conference attendees–showed a market forecast of 3,000 aircraft in a context that appeared to suggest GE sees a market of this number of airplanes for the 777X. We clarified this with Brewer after the panel; the forecast is for the 350-400 seat sector. Brewer told us that GE hopes to capture 1,700 of these aircraft.

This is the first time we’ve seen this sub-sector broken out–Airbus and Boeing typically forecast for the larger 300-400 seat sector in their 20 year forecasts. Airbus and Boeing have previously indicated they think the demand for the 400-seat aircraft (i.e., the 777-9X) is between 670-780 respectively.

The sound is pretty soft on this. It will best be heard with headphones.

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Boeing’s Randy Tinseth provides mythbusting assessment at PNAA conference

Boeing’s vice president of marketing, Randy Tinseth, appeared at the annual Pacific Northwest Aerospace Alliance conference this week in the Seattle area. He talked about Boeing’s annual Current Market Outlook update as well as taking a light-hearted approach to some mythbusting, a la the television show.

http://www.youtube.com/watch?v=b4cSIkbCP5M

http://www.youtube.com/watch?v=nqXvG0Kh8Ho

http://www.youtube.com/watch?v=Ki2ps2Lt7-k

Richard Aboulafia analyzes state of industry, opines on A380neo, what it works for Emirates and other stuff

Richard Aboulafia, an analyst for The Teal Group, is a headline speaker at the Pacific Northwest Aerospace Alliance every year. Below are a series of videos of his presentation this year.

He provides an overview of the commercial airline industry in one, and addresses specific issues in others, such as the prospect of an Airbus A380neo. Aboulafia has been a long-time critic of the A380 but he also remarks why this airplane works for Emirates Airlines, its biggest user.

Aboulafia also talks about a variety of other issues, including remarking on Boeing’s cost-cutting Partnership for Success program, which has resulted in a ” no fly” list of Boeing suppliers unwilling (or unable) to cut costs to Boeing’s liking.

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Odds and Ends: A boost for the A330? Problems continue at Boeing Charleston

A boost for the A330? Aviation Week reports Airbus is offering China an A330 completion center in return for an order for 200 A330s.  At the current production rate of 10/mo over the Airbus production year of 11 months, this is nearly two more years on to the current 27 month backlog.

Problems continue at Boeing Charleston: The Seattle Times has a long piece about the continue problems at Boeing Charleston, the 787 plant there.

Updating the A380: the prospect of a neo version and what’s involved

Recent headlines and this column report that Airbus is considering re-engining the popular A330 with GE Aviation GEnx or Rolls-Royce Trent 1000-TEN power plants. A New Engine Option and other changes would improve the A330’s economy by an estimated 10% percent after offsets for increased drag and weight.

But the A330 isn’t the only Airbus airplane being considered for new engines made popular by the A320neo family. Tim Clark, president and chief operating officer of Emirates Airlines, urged Airbus to improve efficiency of the giant A380 with engine technology found in newer generation aircraft.

How feasible is an A380neo? What are the technological issues? Would there be enough of an economic gain? And is there a market for an A380neo?

The A380 of today

The A380 has been hailed as a highly efficient airliner since it went into service 2008, assuming the giant plane can be filled. But only six years later, the first voices have been raised that this will not continue to be the case should the continuous improvements that have been flowing into the airframe not pick up speed.

The launch of the Boeing 777X also brought focus on the state of the A380 come the latter part of this decade when the 777-9X enters flight testing in advance of its planned 2020 entry-into-service. Tim Clark expressed  that “it is time that the A380 gets an injection of the new technology which is now becoming available for the A320/737 in the form of GTF/LEAP and GE9X for the 777X. “

Before we look into what can be done short-to–mid-term to inject improved efficiency, let’s establish the baseline as it exists today. The A380 is considered by some the most efficient way of flying passengers between two long haul points if there is enough of demand. The competition today is the Boeing 777-300ER and 747-8i.  (Qantas Airways is dropping some A380 flights that have 50% load factors, demonstrating the aircraft is inefficient if the demand is insufficient.)

Let’s assume we want to transport passengers between San Francisco and Hong Kong, one of the longer flights which are made non-stop in both directions. Going West, it takes a Cathay 777-300ER 15 hours and going East, 12 hours, the difference being due to prevailing headwinds going West. For our check, we will use the more demanding of these legs, which then works out as the equivalent of flying 7,200nm. To compare the three different aircraft in a fair way, we need to load them to the same payload, in our case passengers with luggage. We will not consider cargo in this initial analysis. The leg chosen is not one which allows much weight for cargo, but cargo certainly belongs to a complete analysis of an airplane and we will point out where it will affect any conclusions.  

When comparing the standard three-class seating numbers between the OEMs, it is clear these are not made to the same standards of comfort. Airbus has admitted that the A380 is too lightly loaded at 525 passengers. The 777-300ER at nine abreast and 365 seats is equipped with a comfortable 18’’ economy class at 32’’ pitch but the business class is modeled with a non-standard 48’’ pitch. The 747-8i at 467 seats is not laid out to any comfort standards comparable to the other two. To ensure an apples-to-apples comparison we have equipped all aircraft with the same three-class cabin with a standard seating consisting of first class at 81’’ pitch, business class at 60’’ pitch and economy class with 32’’ pitch. Seat widths are 37’’, 22’’ and 18’ respectively and the ratios of the different premium seatings vs. economy are kept the same. Here the aircraft are listed with the in-service year and with their respective payload capabilities:

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Filling the production gap at three OEMs

HawksWinHawksWinHawksWin!!!

Airbus, Boeing and Embraer face production gaps of several years in three key product lines. Two of these, Boeing and Embraer, relate to transitions from current generation airplanes to new derivatives. Airbus faces a large gap for its ambition to continue one popular airliner well into the 2020 decade.

Airbus wants to continue production of the A330 at least to 2022 and perhaps later. Boeing last year launched the 777X to succeed the 777 Classic. Embraer also launched a new derivative, the E-Jet E2, to succeed the E-Jet E1. Based on current production rates, the OEMs’ current backlogs produce the following picture:

Airplane

Backlog

At 12/31/13

Production

Rate Today

Per Month

Current Backlog Ends

EIS of New

Airplane

Production

Gap

A330

267

10

May 2016

2022*

6 yrs

777 Classic

314

8.3

Feb 2017

2020**

3 ½ yrs

E-Jet E1

279

8

Nov 2016

1H2018

1 ¼-1 ½ yrs

* Publicly identified continued production goal

** Boeing says 2020;we assume 1H2020; Market Intelligence indicates Boeing would like to achieve a 2019 EIS.

Leeham Co. Chart. Sources: OEMs.

The key, and obvious, question is what do the three OEMs do to bridge this production gap.

 Embraer arguably is in the best shape. EMB’s chief executive officer told Bloomberg News last week that he sees about 150 E-Jet orders through 2015—but the news report didn’t specify how many might be today’s E-Jet E1 or the re-engined, next generation E-Jet E2. If these 150 turn out to be the E1, the production gap is basically filled. If these 150 are a mix of E1s and E2s, EMB could still have challenges. EMB could, like Airbus and Boeing, combine current and next generation deals into one.

 EMB officials have also gone on record that they won’t cut prices to spur sales of the E1. What else can they say publicly? They are certainly not going to say they’re open to bidding wars, and we’re not at all convinced there isn’t sharp discounting in EMB’s future. Bombardier has famously refused to offer discounts demanded by potential customers and mediocre CSeries sales reflect this. Boeing and Airbus claimed they would maintain pricing on the 737NG and A320ceo families in advance of the re-engined derivatives, but both complained about price cutting by the Other Guy and our Market Intelligence certainly tells us each has engaged in sharp, sharp discounting against each other (and in Airbus’ case, against Bombardier’s Cseries).

 We fully expect Boeing to offer discounted package deals to customers to sell the 777 Classic with the 777X and Airbus certainly expects Boeing will cut the price of the 777 Classic to close the production gap.

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Click this link: Airlines beginning to push for discounts on 777 Classic.

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 Airbus has the greatest challenge: currently a six year gap between today’s backlog and the previously stated goal to maintain production to at least 2022. Airbus has been more successful with the A330 than officials ever expected (helped in no small measure by the 787 program debacle). With a production line long-since paid off (which is also true for the 777 Classic), Airbus has a lot of pricing flexibility (as does Boeing). But while Boeing has a successor product for the Classic, Airbus positions the A330 as a complementary airplane to the A350, not a successor. The launch last year of the A330 Regional is an effort to refresh the line and add sales, but so far none has been announced. Proceeding with an A330neo would breath new life into the program, probably adding 10-15 years to production.

 Another way to bridge the production gap is to reduce rates and spread out delivery dates. But this repositions cash flows and profits, and it’s something we don’t think the OEMs will want to do.

 We think price discounting, as with the 737NG and A320ceo, will be the more likely solution.