Leeham News and Analysis
There's more to real news than a news release.
CFM LEAP accelerating in test program; Airbus and the A350-800
Aviation Week has a long, detailed story about the test program for the CFM LEAP engine, which is accelerating rapidly.
In its 737 MAX program update yesterday, Boeing said the LEAP-1B has begun testing and it will benefit from the testing already underway for the LEAP-1A, the version that is designed for the Airbus A320neo family. The LEAP-1C for the COMAC C919 is on its original schedule for certification in 2015, despite the fact the C919 has slipped to at least 2017, reports AvWeek.
The 737 MAX is exclusively powered by the LEAP, as is the C919. The former has more than 1,600 firm orders and the latter just hit its 400th order/commitment. CFM faces competition on the A320neo family from Pratt & Whitney’s P1000G Geared Turbo Fan, where PW holds a 49% market share against CFM, which previously held a larger, more dominate position in the A320ceo competition. A large number of orders don’t yet have an engine selection.
PW is the sole-source engine provider for the Bombardier CSeries, the Mitsubishi MRJ and the Embraer E-Jet E2. PW splits the engine choice on the Irkut MC-21 (soon to be renamed the YAK 242) with a Russian engine.
Just as Boeing’s LEAP-1B will benefit from the experience of the LEAP-1A now in testing for Airbus, Airbus will benefit from the testing and experience of PW’s testing of the GTF on the Bombardier CSeries.
Aviation Week also has a story about the Airbus A350-800 with the blunt headline, The airplane Airbus doesn’t want to build. This refers to the A350-800. AvWeek muses that the outcome of the merger between US Airways, now the largest customer for the airplane, and American Airlines, may be the deciding factor for the airplane. We agree. With American’s large order for the Boeing 787-9, the A350-800 would be unnecessary.
That would then leave Hawaiian Airlines as a key decision-maker. We hear in the market that Hawaiian is just sitting back and waiting to see what kind of incentives Airbus will offer to entice a switch to the larger A350-900.
Odds and Ends: AA, US and DOJ have mediator; new C919 order; A380 break even
Movement on AA-US merger: Terry Maxon of The Dallas Morning News reports that American Airlines, US Airways and the Department of Justice have picked a mediator to sort out the DOJ’s lawsuit to block the AA-US merger. See also this Maxon report.
Maxon has a long piece, asking several pontificators (including yours truly) what they think the outcome will be.
Bloomberg reports that American CEO Tom Horton “sees a way” to a settlement but did not elaborate.
COMAC orders: COMAC says it received 20 more orders for the C919, but it once again is from a Chinese lessor, not an airline. A majority of orders for the C919 are from Chinese lessors, in stark contrast to standard practice among established lessors that they want to see a solid base (or a likely solid base) for a new aircraft type from airlines before signing up.
Although COMAC says this latest order brings the total up to 400, a data base shows only 275 so far (meaning the other 125 haven’t been converted to firm orders yet).
A380 Break Even: Airbus CEO Fabrice Bregier says hitting break even on the A380 program in 2015, which is the current plan, will be difficult if deliveries fall below the target of 30 per year. Airbus should deliver 25 this year, he said.
Future for the 777, A330 as 777X nears launch, A350 nears EIS
With the launch of the Boeing 777X expected to be approved this month by the Boeing Board of Directors, followed by the public launch at the Dubai Air Show next month, the future sales of the in-production 777 will be closely watched by the industry as well as by Boeing itself.
It is conventional wisdom that sales will fall off as entry-into-service nears for the 777-9X, said to be “late this decade” by Boeing but more likely 2020 or even 2021, according to customers.
Sales of the Airbus A320ceo and Boeing 737NG families have, so far, held up surprisingly well despite the launch in 2010 of the A320neo and in 2011 of the 737 MAX families. Most of the neo and MAX orders have been combined with the current generation aircraft. This has been viewed as a way to keep the production lines full in advance of the EIS of the new airplanes.
Further, Airbus and Boeing plan an overlap of production of the two generations of about two years. This contrasts with Boeing’s decision to cease production of the 737-300/400/500 concurrent with the launch of production of the 737NG, a move Boeing today says was an arbitrary choice.
Boeing plans to begin building the MAX on a third line in its primary Renton (WA) factory before phasing out the NG. Airbus hasn’t specified how it plans to integrate the production of the ceo and neo.
What will happen for the current Airbus A330 and Boeing 777 lines as the A350 and 777X come on line?
Odds and Ends: Airbus to rethink A380 strategy, says Reuters; Boeing B-29
A380 Strategy: Airbus may rethink the near-term strategy of the A380, with an eye toward reducing production rates, reports Reuters. Earlier this week, Boeing announced a rate reduction for the 747-8. Very Large Aircraft (VLA) continue to be a tough sell. YTD, Airbus has net orders of minus three for its VLA, although a Memorandum of Understanding for 20 was signed at the Paris Air Show and is expected to be firmed up by year end and possibly at the Dubai Air Show next month.
Still, the VLA market is very tough. Boeing sold five 747-8s this year and had cancellations of five. Airbus hasn’t met its annual sales target for the A380 for a couple of years.
787-9 Video: In a change of pace, enjoy this video that is nothing but a relaxing visual.
[youtube=http://www.youtube.com/watch?v=eUZmTzPyR-A&w=560&h=315]
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Boeing B-29: Here’s a sight not seen much anymore: take off and landing of a B-29. As interesting as this is, the weather and the photography is pretty cool, too.
[youtube=http://www.youtube.com/watch?v=3-r8p97vPt0&w=560&h=315]
Odds and Ends: Repairing the Ethiopian 787; more on A350-1000 stretch; new RR engine study
Ethiopian 787: Dominic Gates at The Seattle Times has a detailed story about how Boeing is repairing the Ethiopian Airlines 787 damaged by a fire at London Heathrow Airport earlier this year. Boeing doesn’t comment for the story–nor for any others–but Gates’ detail in his piece makes for quite interesting reading.
Stretching the A350-1000: More on this topic from Aviation Week. Aside from the technical considerations for the airframe, Rolls-Royce would need to bump up the thrust of the engine to around 104,000 lbs, we’re told. Also: there is the matter of production. Airbus is considering a second production line for the A350, but no decision has been made.
Rolls-Royce studies new engines: Rolls-Royce is studying a new line of engines, according to this Bloomberg article.
Is tide ready to turn for CSeries?
CS100 first flight, September 16, 2013. Photo via Seattle Times.
Is the tide ready to turn for the Bombardier CSeries?
Following a nine month delay, the CS100 Flight Test Vehicle #1 took to the air September 16. It’s flown only twice since and has been undergoing ground vibration tests and more software upgrades. BBD is pretty mum about the testing program, which causes speculation about whether some issue emerged during the three flight tests. But we’re told by a source familiar with the program, but who is not with BBD, that BBD is being conservative in its pace, counting on the fact that it will eventually have seven FTVs to bring entry-into-service on time. A few Canadian aerospace analysts think EIS will slip to 1Q2015.
Then there are the orders, just 177 firm, which is more than those for the Airbus A319neo and the Boeing 737-7 MAX combined, but which the market perceives as low and a slow-selling program. Bombardier points out that the firm sales are about on par with other new airplane programs at this stage, but the market–dazzled by the thousands of orders placed for the NEO and MAX–won’t make these distinctions.
But it’s possible the tide is ready to turn for the CSeries. Here’s why.
- Potential customers have been waiting for the first flight and to see whether the program will be more or less on time with the new, implied schedule emanating from first flight. We believe a few more months have to pass before any conclusions are drawn on this score.
- Likewise, a few months have to pass before Bombardier and Pratt & Whitney will know whether the economic promises will in fact be achieved.
- There are some key sales campaigns for which decisions should be made in the coming months, both this year and into next, that if BBD wins will serve to build significant momentum.
- Airbus is running out of delivery slots for the entire A320 family. The VivaAerobus order announced October 21 includes deliveries beginning next year. The backlog goes to 2019-2020, and while John Leahy, COO-Customers, is adept at finding slots through juggling the skyline, there simply aren’t too many left mid-term. Bombardier is sold out into 2016 and is a better position to offer deliveries in quantity. This makes it difficult for Leahy to “buy” a deal, which he has done on several occasions, to under-price CSeries to a point where BBD can’t play in the sandbox.
- Boeing remains more focused on the 737-8/9 than on the 737-7, leaving BBD to largely fight its war against the diminishing Airbus and the forthcoming Embraer E-190/195 E2, the latter with a planned EIS of 2018, a good three years after CS100 enters service.
It will likely be next year before solid trends are noticeable. BBD retains its goal of reaching 300 firm orders and 20-30 customers by EIS, at least a year from now. We think this is easily achievable.
Update, Oct. 22: The Iraq-Business News reports that the government has approved the purchase of five CS300s at $40m each.