Leeham News and Analysis

There's more to real news than a news release.

There's more to real news than a news release.

Bridging the gap from E-Jet E1 to E2

Facing a production gap of a year of more between today’s in-production airplane and the entry-into-service of its new model, Embraer is confident it can bridge this gap with little difficulty.

 

Bundling orders of the E-Jet E1 with the re-engined, re-winged E-Jet E2 will be one way, Claudio Camelier, vice president of market intelligence, told us during the International Society of Transport Aircraft Trading conference in San Diego.

 

Chief Commercial Officer John Slattery told us he’s charged his sales force to pursue aggressive sales campaigns to add to the customer base, not only with new aircraft but also with used ones, to 100 by EIS of the E-190 E2 in the first half of 2018.

 

Sales last year to American Airlines, United Airlines and Republic Airways Holdings were important steps in bridging the production gap, Camelier told us. These three companies ordered 177 E-175 E1s, ending 2013 with a stronger position than EMB started the year with. EMB currently produces the E-Jet at a rate of about eight per month, a figure that will be more-or-less maintained for the foreseeable future.

 

EMB began this year with orders for 25 E-190 E2s and 25 E-195 E2s from India’s Air Costa. A stiff campaign with Bombardier at Air Canada faces off the E2 with the CS300, a contest that many expect will be decided by mid-year, perhaps in time for the Farnborough Air Show. The E2 has a common cockpit with the E1, but the engines, wings, many systems and aerodynamic improvements distinguish the airplanes from each other.

 

Additionally, the E-195 E2 has three more rows for 12 more passengers, putting some more distance between itself and the E-190. The E-190 and E-195 had only an eight passenger difference, resulting in generally slow sales for the E-195; now it’s 20+, a capacity that should make the E-195 E2 more attractive, Camelier told us.

 

The larger capacity is more attractive in Europe, where scope clauses in pilot union contracts have passenger capacity limits of 100-105 vs about 76 seats in the USA, Camelier says.

 

The E-190 E2 is at the end of its first design definition phase and will complete the Preliminary Design Review during the first half of this years.

 4 Comments

 Posted on March 31, 2014 by

 Bombardier, CSeries, Embraer

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Bombardier CSeries program update

Bombardier’s investors day last week covered a lot of ground across its entire business line, including rail, corporate aircraft, as well as commercial aerospace.

The area of most interest, of course, is on the CSeries, the all-new aircraft design that pits BBD for the first time directly against Airbus and Boeing and their small A319ceo, A319neo, 737-700 and 737-7.

The CSeries, in its current iteration, was launched in 2008 with an entry-into-service announced for December 2013. With three subsequent delays, EIS is now slated for the second half of 2015 (the CS100, followed by six months by the larger CS300).

Sales have been slower than desired, both by observers and by some within BBD, though executives say they are satisfied with sales to-date: there are 201 firm orders and 445 orders, options and LOIs, from nearly 20 customers. This compares with the announced goal of 300 firm orders and 20-30 customers by the previous EIS of 4Q2014. BBD has not reset the goal following the new 2015 EIS.

During the investors’ day, no “breaking” news was announced; no new orders were revealed and a broad update of the flight test program was discussed.

Sales campaigns revealed last year continue to be pursued: Monarch Airlines of the UK, Air Canada and, more recently, Ethiopian Airlines. A CSeries sales campaign in Russia, where Bombardier has had success for the CSeries and the Q400, may be sidetracked due to the recent events in Ukraine and selective international sanctions against Russia by the West. BBD already acknowledged its Q400 program in Russia has been affected.

CS100 Flight Test Vehicle 3 entered the program just before the investors’ day. FTV 4, the one that will concentrate on engine testing, had “power on” last week and should enter flight testing soon. FTV 5 follows at an unspecified date, with FTV 6 and 7–the CS300 aircraft–coming thereafter.

The following slides, from presentations at the investors’ day, represent some selected overviews of the BBD discussion.

Read more

 2 Comments

 Posted on March 24, 2014 by

 Airbus, Boeing, Bombardier, CSeries, Embraer

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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.

EIS 100-149

 

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.

 12 Comments

 Posted on March 17, 2014 by

 Airbus, Boeing, Bombardier, CSeries, Embraer

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Odds and Ends: MH370, Day 5; Delta’s RFP

MH370, Day 5: Yesterday brought another round of frenzied media coverage when the Chinese government released satellite images of what might be pieces of the Malaysian 777 in the water, 140 miles west of the last known contact position of flight MH370.

These images were identified as being up to 72 feet long and 52 feet wide. The images were taken Sunday, after the Friday night/Saturday morning disappearance.

We’re skeptical that these things are part of the airplane. They are huge to be floating on the water. Most likely something this big would have sunk.

Further, we simply cannot get past the fact that no debris field of any kind has been seen anywhere along the intended flight path or within broad proximity. Seat cushions, aircraft insulation, light-weight parts, papers, and even bodies should have been found in broad proximity to the “crash” site–and these haven’t been.

Certainly this would be a breakthrough if these objects turn out to be part of the plane, for you then could mathematically take into account the currents and winds and backtrack to the point of origin. But we aren’t going to count on it.

And in a dramatic development, The Wall Street Journal reports that signals from the plane’s engines indicate the flight flew on for four hours after the transponder stopped sending signals. This theory has been denied by Malaysia.

Delta’s RFP: Aviation Week has a short story that’s filled with news about the Delta Air Lines request for proposals to replace its Boeing 747-400 and Boeing 767-300ER fleets. The story also contains some information about the need for a plane the size of the Bombardier CSeries. Delta wants the Airbus A330neo, the A330 Classic, the A350 or the Boeing 787 (it has left-over, deferred orders from Northwest Airlines on the latter), and it needs a plane with around 5,000nm-6,000nm range (which fits the A330-300/300neo). It also says the Boeing 737-700 isn’t economical and the 737-800 is too big. While not naming the A319 and A320, the Boeing equivalents, we believe the same is true for these aircraft. This suggests the CSeries. Delta also likes the Pratt & Whitney Geared Turbo Fan.

 64 Comments

 Posted on March 13, 2014 by

 Airbus, Boeing, Bombardier, CSeries

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The case for an NSA in 2025 — successor to 737-8 MAX — (continued)

 Editor’s Note: Given the amount of interest in the prospect of replacements for the single-aisle airplanes, including the Boeing 757, our Guest Columnist provided a follow-up think piece.

By James Krebs

With the reengined Boeing 737 MAX and Airbus A320 neo families selling like gangbusters, it may seem premature, before one even flies, to be considering a New Small Airplane (NSA) successor to enter service beginning in 2025. But I’m convinced the NSA will come before conventional wisdom expects. The marketplace will demand them.

A combination of market forces could make a compelling case for a NSA in service in 2025.

–   Continuing high fuel prices

–   Increasing urgency to reduce aviation carbon emissions

–   Availability of technology for 20% fuel savings vs 737-8 max and A320 neo (at same seat number) at acceptable risk

–   Traffic growth calling for more seats for 2025 and beyond.

–   Growing pressure from the airlines later in this decade for cleaner, more economical short haul NSA’s

–   Huge global market potential for NSA families — with their performance improved through the years

–   A short haul market share by 2017-18 (neo’s and MAX in service) very disappointing to Boeing.

Read more

 97 Comments

 Posted on February 25, 2014 by

 Airbus, Boeing, Bombardier, CSeries, Embraer, Irkut, Mitsubishi

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Lessons learned from A380, 787 benefit A350

By Leeham Co EU

Lessons learned by Airbus on its A380 production and development by arch-rival Boeing of the troubled 787 appear to be paying off with the A350 XWB.

There are now two A350s operational in the flight test program as it counts down to a fourth quarter delivery target for launch customer Qatar Airways. Testing has passed the 1,000 hour mark and by all accounts is going well. Three test aircraft are coming on line in the next four months to complete the 2,500 flight hours needed for certification. After 1,5 years of delays, the flight test program appears proceeding smoothly and tracking to plan.

Boeing and Bombardier should have had it so good with the 787 and CSeries. The 787 program was delayed nearly four years, interrupted by design and production issues and an in-flight fire on final approach to a landing in Texas involving a power control unit. Bombardier last month announced a new delay, its third, in the CSeries countdown to EIS, this time of 9-15 months.

With flight testing heading for certification in August-September, Airbus says the big challenge is now the production of the serial airplanes. Having been following the production preparations over the last two years, here is our view on how Airbus stands in their industrial ramp up. Airbus plans to ramp up to 10 A350s per month four years after EIS, and it is talking with suppliers about a higher rate.

Read more

 27 Comments

 Posted on February 23, 2014 by

 Airbus, Boeing, Bombardier, CSeries

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Odds and Ends: LEAP vs GTF; CSeries flight testing; MRJ FAL

LEAP vs GTF: Reuters has a story looking at the intense competition between CFM and Pratt & Whitney for the market dominance of the LEAP vs Geared Turbo Fan engines.

The only airplane where there is competition is on the Airbus A320neo family; CFM is exclusive on the Boeing 737 MAX and COMAC C919 and PW is exclusive on the Bombardier CSeries, Embraer E-Jet E2 and Mitsubishi MRJ. PW shares the platform of the Irkut MC-21 with a Russian engine. PW says it has sold more than 5,000 GTFs across the platforms. CFM has sold more than 6,000 across the three models it powers.

On the A320neo family, the competition is 50-50 at this point, with a large number of customers yet to decide on an engine choice. However, 60 A320neos (120 engines) ordered by lessor GECAS never were in contested (GECAS buys exclusively from CFM) and 80 A319/320neos from Republic Airways Holdings (160 engines) were part of a financial rescue package for then-ailing Frontier Airlines.

PW’s joint venture partner, International Aero Engines, shares the A320ceo family platform with CFM. Late to the market, IAE caught up to CFM in recent years.

On platforms where they compete, the sales figures so far show a neck-and-neck competition between CFM and PW.

Update, 12:30: The link has been fixed. Update, 9:30 am PST: Flight Global has this story reporting that PW plans a Performance Improvement Package on the GTF that will further cut fuel consumption by 3%.

CSeries flight testing: Bombardier’s CSeries flight testing has been slow to this point, but it’s beginning to ramp up. Aviation Week reports that FTV 3 should be in the air by the end of this month and FTV 4 should follow in April. FTV 3 is the avionics airplane and FTV 4 focuses on GTF engine testing.

Mitsubishi MRJ: Aviation Week also reports that the Mitsubishi MRJ airplane #1 is nearing final assembly.

 12 Comments

 Posted on February 18, 2014 by

 Airbus, Boeing, Bombardier, CFM, Comac, CSeries, Embraer, Irkut, Mitsubishi, Pratt & Whitney

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Odds and Ends: 777X wing to Everett; Boeing discounts; A330, A380neos; A350 debugging; 787 bonuses; CSeries costs up $1bn

777X wing to Everett: Dominic Gates of The Seattle Times reports that Everett (WA) at Paine Field has been selected for the production site of the 777X wing. The plant will be adjacent the huge  Boeing factory at Paine Field.

Boeing’s facility in Pierce County 65 miles away was another possibility, as was a site on the west side of Paine Field.

Boeing discounts: The Blog by Javier figures the average Boeing pricing discount for its 7-Series airplanes last year was 45%. Note that this is “average.” We’re aware of some campaigns that comfortably exceeded 50%. The same can be said for Airbus.

A330, A380neos: Aviation Week has a good interview with Tom Williams, EVP of programmes for Airbus, over the prospect of A330 and A380 neos. Although the AvWeek article includes the Pratt & Whitney Geared Turbo Fan as a possibility for the A330neo, we’ve previously reported that the timeline being discussed–a 2018 EIS–precludes the possibility because PW can’t develop a Big Engine GTF before 2020.

A350 debugging: Bloomberg has a long article about the “debugging” process for the A350.

787 bonuses: Boeing has offered its Charleston employees bonuses if they meet production targets for the 787: three 787s a month by this summer, a good six months later than had been targeted (year-end 2013). The report comes from the Charleston Post and Courier via The Everett Herald.

CSeries costs up $1bn: Bombardier announced its year-end earnings Thursday and bumped the program cost of the CSeries by $1bn. Reaction among analysts was not kind. See stories here, here and here.

 77 Comments

 Posted on February 16, 2014 by

 Airbus, Boeing, Bombardier, CSeries, Pratt & Whitney

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Odds and Ends: A350 state loan; Bridging 777 Classic sales; Embraer nabs E2 order; IAM chief speaks out

A350 Loan: The Wall Street Journal reports that Airbus and Germany ended talks about a state loan for the A350 program. Good. Airbus doesn’t need the loan and “divorcing” from state aid frees Airbus to make decisions for the production based on commercial considerations and not politically-driven jobs requirements.

Airbus is considering a second A350 production line to open up slots for the -1000 model. Germany made no secret that this line had to be in Hamburg in exchange for the loan. Our Market Intelligence indicates Airbus may want to locate the line outside Germany and perhaps outside Europe. Ridding itself of continue German meddling is a good thing for Airbus; now it “only” has the unions to deal with.

  • In a Guest Column in Aviation Week, Richard Aboulafia continues his A380-bashing, but what he has to say about challenges facing Airbus in the twin-aisle, heart-of-the-market sector bears reading.

Bridging 777s: Jon Ostrower at The Wall Street Journal published this story today about Boeing’s plans to support the 777 Classic sales in advance of the 777X. He reports that Boeing will try to pair 777 Classic orders with the 777X (something we forecast months ago). Boeing is also going to launch a 777 P2F program, persuading airlines to sell their older 777s to cargo carriers and replace them with new 777 Classic orders. This is a challenge because of the continuing softness in the cargo market and plenty of 747-400s available for conversion and 747-400Fs parked in the desert. Such a plan will make it increasingly difficult to support sales of the new-build 747-8F as well.

Although Boeing said it won’t shave the price on the 777 Classic to stimulate sales, we think it will (as it has on the 737 NG).

Embraer nabs E2 customer: Embraer today announced it won an order from an Indian airline for 50 E190 E2s and 50 E195 E2s with options for 50 each. The airline, Air Costa, is a current E1 customer. This is the first E2 order since the launch of the program at the Paris Air Show last June.

Reuters has an article from the Singapore Air Show quoting the Air Costa CEO. The article takes a look at the “small” aircraft market.

IAM chief speaks out: The president of the International Association of Machinists, Tom Buffenbarger, called the Puget Sound Business Journal to talk about the controversial Boeing 777X contract vote.

Why would Buffenbarger do this? He’s facing his first contested election since 1961 and his opponent is from IAM District 751 right here in Seattle. The article makes fascinating reading.

MC-21 profile: A Russian newspaper provides a profile of the Irkut MC-21 (or MS-21 or Yak-242). Talk about confused branding.

 73 Comments

 Posted on February 13, 2014 by

 Airbus, ATR, Boeing, Bombardier, Embraer, IAM 751, International Association of Machinists, Irkut, YAK

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Odds and Ends: CNBC reporter says Boeing’s McNerney among top 25 CEOs; 757 replacement; BBD earnings; Spirit Air

CNBC and Boeing’s McNerney: CNBC reporter Phil LeBeau, who covers aerospace and automobiles among other topics, thinks Boeing CEO Jim McNerney deserves a place in CNBC’s Top 25 CEO list. Here’s why. Aaron Karp at Air Transport World has his own take on Boeing’s position in the market today.

757 replacement: Airchive has an analysis on the need fora Boeing 757 replacement that is well worth reading. Our analysis was last October. Richard Aboulafia of The Teal Group said last week he also believes a 757 replacement is on its way (with a launch in 2018, as we previously suggested). Bloomberg has this article from the Singapore Air Show on the topic.

Bombardier earnings call: BBD reports its fourth quarter and year-end financial results Thursday. It will be interesting to hear of the impact of the latest CSERiesdelay, of 9-15 months. Here is a report in the Toronto Globe and Mail on what analysts thought in advance of the call.

Spirit Air CEO profile: The Associated Press has an entertaining profile of the CEO of Spirit Airlines, the notoriously unfriendly US airline that rivals Ireland’s Ryanair for fees and an apparent dedication for pissing passengers off.

 23 Comments

 Posted on February 11, 2014 by

 Airlines, Boeing, Bombardier, CSeries

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