Leeham News and Analysis
There's more to real news than a news release.
CIT Aerospace looks at A330 future
CIT Aerospace, one of the Top Tier lessors in the business, takes a look at the future options of the Airbus A330.
In a short paper released concurrent with the start of the AGM of ISTAT, the International Society of Transport Aircraft Traders, in San Diego today, CIT’s Steve Mason outlines what he sees as the options facing Airbus to improve sales.
The four page PDF may be found here.
We have production rates of 14 Boeing 787s a month (vs 16 in the CIT analysis) and 10 Boeing 777Xs a month (based on Boeing’s own information) vs eight in the CIT analysis, but otherwise the CIT analysis is very similar to the issues we’ve written about here previously, so we won’t repeat them. We presented yesterday to the ISTAT Appraisers Continuing Education meeting about the production gap facing Airbus, Boeing and Embraer between their current airplanes and future programs, a topic we’ve also discussed here previously. CIT and we concur that Airbus has a major dilemma with the A330 going forward; we believe Airbus should proceed with the A330neo, which should extend the life of the airplane by 10-15 years. Absent this, we believe Airbus will be at a major production rate disadvantage in the important 210-400 seat twin aisle sector.
Bombardier CSeries delays have little impact vs competitors
Bombardier’s third CSeries Flight Test Vehicle finally became airborne March 3. FTV 3 focuses on avionics. FTV 4 will focus on the testing of the Pratt & Whitney Geared Turbo Fan engine; Bombardier hasn’t announced a date when this airplane will join the test program.
Bombardier’s rescheduled flight test schedule, reflecting a 9-15 month additional delay to entry-into-service (now the second half of 2015), hasn’t been publicly detailed. BBD presents to the International Society of Transport Aircraft Traders (ISTAT) at its annual US meeting this week in San Diego, and there is an investors day later in the week. We expect one or both venues to provide program updates.
The new EIS narrows the gap between the CSeries and its competitors, the Airbus A319neo, the Embraer E-190/195 E2 and the Boeing 737-7 MAX. But the impact isn’t significant, in our view. Airbus’ A319neo—the direct competitor to the CS300—was to be the first of the re-engined challengers to the new-design CS300 with an EIS originally set for the first quarter of 2016 (six months after the A320neo EIS of October 2015). But Qatar Airways, the launch customer of the A319neo, dropped this order in favor of the larger A320neo. The A319neo EIS is now slated for the second half of 2017, for Avianca Airlines.
This means the original two-year gap between the CS300 and the A319neo remains the same, assuming no additional delays for the CSeries and none for the A319neo.
Parenthetically, we are unsure if Frontier Airlines will take its order for 20 A319neos, with first delivery scheduled in 2018. When we talked with CEO David Siegel two years ago, he expressed doubts about taking the airplane, preferring the larger A320 sibling. The only other announced customer is Avianca, with a firm order for nine. Will Avianca ultimately take the A319neo, particularly if Frontier swaps its order? We have our doubts. There is an unannounced customer for the A319neo for eight, according to the Ascend data base, but delivery dates currently are listed as “2500.”
The Embraer E-190 E2 nominally competes with the CS100; it’s barely within the 100-125 seat category in a one-class configuration, while the CS100 is comfortably within this sector. In two classes, the E-190 E2 is an 88 seat aircraft and the CS100 is 100 seats. The CS100 also has more range; arguably these are different classes of aircraft.
The E-195 E2 nominally competes with the CS-300. In one class, the E-195 E2 is a 132 seat airplane, but the CS-300 carriers 145-149 passengers, and as with the CS-100 has longer range. The E-195 E2 is a more direct competitor with the CS-100, but range is shorter and missions may be somewhat different. The EIS for the CSeries vs the E2s still has a gap of 2 ½-3 ½ years, assuming no delays to either program based on the currently announced schedules.
The 737-7 MAX EIS is slated for 2019, about four years after the CS-300.
Thus, we see little impact to Bombardier’s delay from a practical standpoint.
Despite the additional delay, Bombardier hasn’t yet updated its expectations for firm orders and customer numbers. It’s still reporting its goal to have 300 firm orders and 20-30 customers by EIS (previously fall of 2014). Moving the EIS to the right by 9-15 months should implicitly infer higher numbers. Perhaps new targets will be revealed in the program update this week.
Rolls-Royce plans for new single-aisle, twin-aisle airplane engines
Rolls-Royce may not be at a cross road but it’s certainly at a fork in the road.
RR sought to be a dual-source supplier for the Boeing 777X, competing with GE Aviation for the privilege; it was generally a given that GE would be a provider. The question was whether it would be the sole supplier or share the platform with another. Pratt & Whitney withdrew, concluding the business case wasn’t there for its proposed big Geared Turbo Fan. RR stayed in the competition, assured by Boeing that it wasn’t a stalking horse to GE.
But GE won the position as exclusive supplier, much to RR’s consternation.
Next, the future of the Airbus A350-800, powered exclusively by RR, is in serious doubt. The backlog is now down to a mere 46 as customer after customer, encouraged by Airbus, up-gauged to the A350-900 and -1000 sub-types. While RR is also the exclusive supplier on each of these models, and the engines are largely common, there has been substantial investment by Rolls on the -800’s application. If the -800 is canceled (as many industry observers believe it will be), RR’s investment is largely down the drain. How does Airbus “make good” to RR for this?
Odds and Ends: MAS MH370, Day 3; Qatar on A380; A330neo; New Small Airplane
MAS MH370, Day 3: The dominant news last week and over the weekend was, of course, the mysterious disappearance of Malaysian Airlines flight MH370, a Boeing 777-200ER. It didn’t just crash (which is the assumption): it vanished, with no trace at all.
There was a tantalizing clue that maybe it turned back toward Malaysia, its origination, based on radar returns. But if it were near the Vietnam coast, why turn back when there probably would have been a closer airport in the event of an emergency?
If the radar report is accurate, and the airplane did turn, the larger question is whether the turn was intention, under the command of the pilots (or hijackers), or whether the turn was induced by some problem with the airplane or engines, or an explosion?
As we wrote over the weekend, the absence of debris along intended flight path suggests the airplane deviated–but this is speculation, albeit perhaps supported by the radar indication of a turn.
Some of our Readers, and observers on television, noted that a few days passed in the case of Air France 447 before debris was spotted. AF447 was the Airbus A330 that disappeared between Rio de Janeiro and Paris in 2009 in the South Atlantic. There are similarities but there are differences, too. AF447 went down well out into the open Atlantic in waters about 15,000 feet deep. MH370 disappeared in a much smaller, confined area where the depths are much shallower: up to 300 feet deep. The entire Gulf is 320,000 square km, no small area to search but certainly far smaller than the South Atlantic where AF447 went down.
Latest developments:
- It’s now been reported that the oil slicks have been analyzed and are not from MH370.
- Officials say it was standard procedure to keep the cockpit door locked, in accordance with ICAO rules, and cannot be opened from the outside. We’d point out that this doesn’t rule out a cockpit breach entirely, however.
- The “passport passengers” were not Asian.
The Wall Street Journal created this graphic that is quite illustrative about the situation. What we haven’t seen anywhere is the location for the “turn” reported by radar.
Mary Kirby and Steve Trimble have opinion pieces about the need for a real-time streaming of information. Kirby’s piece is here and Trimble’s is here. Each have a good argument. One thing they don’t talk about is whether there are international standards that would permit this. We did a story for Kirby when she was editor of APEX magazine about the international standards issue with respect to Wi-Fi on airplanes. That story is here.
Although the details between Wi-Fi and real-time aircraft data streaming are different, we wonder if the over-arching challenge Boeing faced with Wi-Fi is the same or similar for real-time data streaming.
Qatar on A380: Akbar Al-Baker, CEO of Qatar Airways, is known for his hyperbole and about-faces, but every once in a while he expresses an opinion that has some useful information. His comments about the Airbus A380 is one of these occasions. Take note of the operating costs vs fuel prices and the reference to re-engining the airplane.
A330neo momentum: There continues to be increasing interest among airlines about the prospect of an Airbus A330neo, our Market Intelligence tells us.
New Small Airplane: Here is a 13 page PDF paper written in 2012 and presented to the AIAA discussing the prospects of a twin-aisle operation on 757/737/A320 routes.
Investigative focus on MAS MH370
The following will be areas of focus for the investigation of the Malaysian Airlines MH370 crash, involving a Boeing 777-200ER equipped with Rolls-Royce engines. These are standard areas of investigation and at this point, listing them here doesn’t imply or suggest any one area is more prevalent than another.
- Catastrophic structural failure of the airframe and/or engines. We consider this highly unlikely, given the sterling history of the 777, but investigators will look at this possibility.
- Dual engine flame out and immediate loss of control. The RR engines have had a history of icing that cut fuel flow. This was the cause of the British Airways 777-200ER crash landing at London Heathrow. A fix was undertaken, but this possibility will undoubtedly be considered. Even if this happened, unless there was an immediate loss of control, there would have been glide time and the ability of the crew to radio an emergency. The Ram Air Turbine (RAT) would have supplied basic power and instrumentation.
- Control upset caused by clear air turbulence. Apparently weather was good but CAT is not unusual in the Pacific. CAT would have to be awfully extreme to cause an upset of such magnitude as to permit the airplane to dive into the ocean in so short a period of time as to preclude a radio call. But remember that Air France 447 descended from cruising altitude to impact without a radio call in a very short period of time.
- Cockpit penetration and incapacitation of the crew, followed by deliberate destruction of the airplane.
- A bomb.
- Any prospect of an accidental shoot-down by a military missile.
- Pilot suicide. As inflammatory as this possibility is, this has been the cause of at least two crashes into water. The history of the pilots will be studied and any information from the black boxes will help on this point,
Odds and Ends: No 90-seat ATR for now; 777X work; JAL says A350 was ‘better;’
No 90-seat ATR: Aviation Week reports that for now Airbus Group, which owns 50% of ATR, won’t green-light a 90-seat ATR turbo-prop due to the adverse impact a development program would have on profits.
Competing for 777X work: Electroimpact is based near Paine Field in Washington and it supplies Boeing and Airbus. It’s interested in participating in the Boeing 777X work. The Everett Herald has this story focusing on the company. Meanwhile, Reuters has this story about the pressures the Airbus and Boeing supply chains are under to cut costs.
JAL: A350 was ‘better:’ Japan Air Lines says its choice of the Airbus A350 was made because the airplane was just “better” than Boeing’s offering. CNBC reports.
No highway in the sky: Just on the ground. See this series of photos to see what we’re talking about.
Boeing’s plan to bridge 777 production gap includes a 777-200 P2F strategy; we’re skeptical of the idea
Boeing plans to begin an effort to stimulate demand of the 777 Classic to bridge a three year production gap to the 777X entry-into-service in 2020. One of its strategies is to persuade current 777-200 operators to sell their aircraft to cargo airlines for conversion, replacing these with new 777s. This was first reported by The Wall Street Journal.
We’re skeptical of this on a couple of counts. First, we remain unconvinced that 777-200 operators will be incentivized to buy new 777 Classics unless there is a deep, deep discount—something Boeing claims it doesn’t plan to do, although we wouldn’t expect Boeing to say anything else.
Odds and Ends: Rolls follows Pratt with GTF technology; Airbus’ challenge;
Rolls-Royce and GTF: Rolls-Royce today said it will pursue technology for its next big engine that follows the Geared Turbo Fan technology of Pratt & Whitney’s smaller design.
Aviation Week has this story and Bloomberg has this one.
RR says the engine will be ready around 2020, which is just about the time Emirates Airlines would like to see an engine that is 10% more efficient than today’s technologies, for the Airbus A380.
Airbus’ challenge: Reuters has a think-piece about the challenge Airbus faces in the heart-of-the-market twin-aisle sector occupied by the A330 and A350. Bloomberg discusses the A350 challenge in its report of Airbus Group earnings.