Leeham News and Analysis
There's more to real news than a news release.
Bjorn’s Corner: Engine efficiency
18 September 2015, ©. Leeham Co: The debate around the market’s two single aisle combatants is quite heated, with fans of the one side saying “the limited space for a high bypass engine on the 737 MAX will cripple it forever” and the other side saying “the tighter design of the 737 will make it highly competitive against the A320neo, it is the A320 which has a weight and size problem”.
One of the arguments is that each inch of engine fan diameter brings 0.5% in increased propulsive efficiency. Therefore the A320 with up to 81 inches fans will win against the 737 MAX, which has a 69 inch fan. Having all the tools to check out if this is really the truth, I fed our airplane model with all the facts and looked at the result. It’s not so easy, guys…
A320 FAL “good for US aerospace,” says Airbus
Sept. 16, 2015, © Leeham Co., Mobile (AL): The opening of the Airbus A320 Final Assembly Line here
achieves a major set of goals set by the company 10 years ago for its own strategic purposes, but officials are also mindful of the larger impact on US aerospace.
David L. Williams, VP Procurement, Airbus Americas. Photo via Google images.
Top executives point out that the Mobile plant reestablished a second commercial aviation assembly site in the US since the last MD-11s and MD-95s rolled out of the former McDonnell Douglas plant in Long Beach (CA) after its acquisition by The Boeing Co in 1997. Boeing continued production of the MD-11 until the end of 2000 (with deliveries occurring in 1Q2001). The last MD-95, renamed the Boeing 717, was produced in 2006. There were 200 MD-11s and 156 717s produced.
With nearly 10 years elapsing between that last 717 and the first A321ceo coming out of Mobile, Airbus officials say the creation of the FAL is not only good for Airbus and Alabama, it’s good for US aerospace.
New single aisles on home stretch
By Bjorn Fehrm
16 Sep 2015, © Leeham Co.: Boeing released pictures yesterday of the first 737 MAX 8 being on the Renton Final Assembly Line (FAL) having completed the wing-to-body joins. With the Airbus A320neo now flying again with both Pratt & Whitney GTF and CFM LEAP test vehicles and Bombardier completing 85% on CSeries (having passed 2,400 hours of flight testing), one can say the new single aisles are on their home stretch.
737 MAX on the Final Assembly Line at Renton, Seattle. Source: Boeing.
Original planning had the CSeries entering service in December 2013, nearly two years before A320neo (October 2015) and four years before the 737 MAX (4Q2017). With the 737 MAX now on the FAL one can start to review the Entry into Service (EIS) for all three. It will be tighter than the companies have said.
Airbus Mobile FAL a victory for CEO Enders
Sept. 14, 2015, © Leeham Co., Mobile (AL): The opening of the Airbus Mobile (AL) A320 Final Assembly Line (FAL) is viewed by some close associates as a personal victory for Tom Enders, the chief executive officer of Airbus Group.
Enders began the quest of a US FAL 10 years ago, when EADS (then the name of Airbus’ parent, now Air Group) joined with Northrop Grumman to bid on the US Air Force Refueling Tanker, the KC-X. The Boeing Co. was the competition, and supplied tankers to the USAF since the end of World War II.
Pontifications: Boeing view of market conditions today
By Scott Hamilton
Sept. 14, 2015, © Leeham Co.: Randy Tinseth, Boeing’s VP Marketing, spoke with Bernstein Research last week on a variety of topics. In a note issued after the conversation, analyst Douglas Harned reported:
- “Boeing views the 140 orders to date as a good start, and that high demand for this model will come later when it is closer to being in service. Boeing is sold out for all models of the 787 through the decade, so there are few opportunities for near/medium term deliveries in any case. The company sees the 787-10 as a natural replacement for 767s, A330s and some 777s, and expects that these will drive strong replacement
Randy Tinseth. Photo: Boeing.
demand in the early 2020s.”
- “Airlines have been upgauging narrowbodies away from the 737-700 and A319. Boeing expects that the 737-900ER will gain share, but that the 737-800 (or soon the 737MAX-8) will remain its most popular narrowbody. Airlines have been moving to larger narrowbodies and using slimline seats to add capacity to existing airplanes. Boeing believes that, while this trend does exist, the market will be centered on the 737-800/A320-size airplanes, but with a larger share than in the past going to 737-900s/A321s. Boeing believes that its product set offers greater flexibility since the 737-800 and 737-900ER are closer together in size that are the A320 and A321.”
- “In terms of orders for the 777, the companyis sold out in 2016 and is over 60% sold out for 2017, with many campaigns in progress. Production of the 777X would start in 2018 and current 777 rates will be lowered to introduce the 777X in the final assembly line (consistent with our projections). There are some 737NG slots left in 2018 and 2019, but the first available slots for the 737MAX are now in 2021.”
Bjorn’s Corner: Production costs.
By Bjorn Fehrm
11 September 2015, © Leeham Co: In connection with our articles, there a numerous reader discussions around the development and production costs of new aircraft families. It’s not easy to understand how these costs arise, how they are booked in the OEM’s accounting and how they can be compared. Time for a primer.
I will not duplicate a course in company accounting, but it can be worth the read to understand how costs are created, accounted for and what we as externals can observe via aircraft industry economic reports .
I will focus on Airbus and Boeing. These are good examples of the different ways of collecting and showing costs in the global aircraft industry.
Embraer faces new challenge from MRJ90
Part 2
Paulo Cesar, president and CEO of Embraer’s commercial aviation unit. Photo via Google images.
Sept. 10, 2015, © Leeham Co. Embraer is the dominant producer of commercial aircraft in the 70-125 seat sector, having overtaken Bombardier in the last decade following the development and 2004 introduction of the E-Jet. Bombardier’s CRJ family struggles, hampered by a sales force that neglected it and the Q400 turbo-prop as attention focused on the new CSeries.
Embraer in recent years faced new competition. However, the early entries—AVIC’s ARJ21 and the Sukhoi Superjet SJ100, both in the 70-90 seat sector, proved little to worry about. The ARJ21, now eight years late, proved to be a technological and industrial dud, a project that was more about learning how to design and build an airplane than producing a commercially viable one.
The SSJ100, while winning favorable reviews, was and continues to be plagued by a poor production system and in recent years the political overhang of Russia’s annexation of Crimea and its war in Ukraine.
Shortly, though, the E-190 faces a new challenger: the Mitsubishi MRJ90. It’s two years late, now forecasting an entry-into-service of 2017—just one year ahead of the redesigned E-190, the E-190 E2. The MRJ90, a 90-seat clean-sheet design, is Japan’s first commercial airliner since the NAMC YS-11 turbo-prop of the 1960s. The MRJ90’s first flight is scheduled for the second half of next month. Full flight testing moves to Washington State in the first quarter next year.
Embraer CEO sees opportunity for 100-seaters in USA
Part 1
Sept. 9, 2015, © Leeham Co.: The chief executive officer of Embraer’s commercial aircraft unit believes a trend might be emerging for US major airlines to directly operate 100- and plus-100 seat aircraft (and below the 125-seat sector), opening new opportunities currently precluding the largest E-Jets, and by implication, competing jets.
Paulo Cesar, president and chief executive officer of Embraer’s commercial airplane unit. Photo via Google images.
US major airlines have generally migrated away from the 100-125 seat aircraft, up-gauging to the 150-162 seat Airbus A320s and Boeing 737-800s and their re-engined successor. The “baby” Airbus and Boeing aircraft, the A319ceo/neo and 737-700/7, haven’t sold well in recent years.
But the Embraer E-195 E2, at 122 seats in a comfortable single-class configuration and somewhat smaller in two class, hasn’t yet penetrated the US market. Neither has the Bombardier CS100, a 100-110 seat aircraft in two- or single-class configuration.
Delta Air Lines is bucking history with acquisition of 88 inexpensive Boeing 717s from the used airplane market. Southwest Airlines and United Airlines are acquiring used 737-700s and United agreed to lease in 25 used A319s.
Cheap fuel and cheap capital costs help these decisions. But Paulo Cesar, president and CEO of Embraer’s commercial unit, sees an opportunity for his airplane.
Boeing’s 767 revitalized as a MOM stop gap, Part 3
By Bjorn Fehrm
Subscription required.
Introduction
Aug. 31 2015, ©. Leeham Co: After examining the characteristics of the Boeing 767 to serve the market segment that Boeing is studying for its Middle of the Market (MOM) requirement, the 225 passenger/5000nm sector, we will now finish the series by looking at how the 767 can be made economically more competitive.
We will study the influence of improved aerodynamics like Aviation Partners Boeing’s Split Scimitar Winglet for the 767. We will also look at what engine PIPs can provide and also look at what a re-engine could bring.
Finally we examine at what happens when we add crew costs, underway/landing fees and maintenance costs to form Cash Operating Costs (COC) followed by capital costs to form Direct Operating Costs (DOC).
Summary:
- Boeing’s 767 has the right cross section for passenger transportation in the 225 passenger/5000nm segment.
- Its wings and empennage are too large, however. We make them work harder by transporting the 767-300ER fuselage and passengers.
- We also introduce aerodynamic and engine improvements. Still, the fuel consumption per seat mile is considerably higher than modern alternatives.
- At a Cash Operating Cost and Direct Operating Cost level, the higher fuel consumption has less influence in today’s fuel prices. The result is that the 767-300ER becomes an interesting alternative as long as the fuel price stays low.
Airbus ‘confident’ engine makers can ramp up production
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Introduction
CFM makes about 50% of the engines on the A320 Family and has about 50% of the backlog for the New
Tom Enders, CEO of Airbus Group. Airbus photo.
Engine Option version. Pratt & Whitney has about the same market share for the NEO, depending on what month it is, with a large number of orders for which no engine has been selected.
Airbus and Boeing are each studying whether to ramp up production of the A320 and 737 families above the record rates already planned.
In an interview Sunday with Leeham News and Comment in advance of the A320 Final Assembly Line opening here, Enders said studies continue whether to take A320 production rates to 60 a month. Boeing is studying rates of 60-63 a month.
Summary
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Posted on September 17, 2015 by Scott Hamilton
Airbus, Boeing, CFM, Leeham News and Comment, Pratt & Whitney, Premium
737 MAX, A320NEO, A380, A400M, air force tanker, Airbus, Airbus Group, Boeing, CFM, Fabrice Bregier, John Leahy, KC-46A, KC-X, Pratt & Whitney, SkyMark, Tom Enders, Transaero, USAF, Virgin Atlantic Airways