Leeham News and Analysis
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Leeham News and Analysis
- Bjorn’s Corner: The challenges of Hydrogen. Part 9. Hydrogen Gas Turbines September 18, 2020
- Sunset of the Quads, Part 7, The A380 September 17, 2020
- HOTR: Adjusting Airbus and Boeing orderbooks September 15, 2020
- Pontifications: Boeing SC makes its case for 787 production consolidation—and it favors Everett September 14, 2020
- Why is the 737 MAX safe now when it wasn’t before? September 14, 2020
Sunset of the Quads, Part 4.
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By Bjorn Fehrm
Introduction
August 27, 2020, © Leeham News: After presenting Boeing’s and Airbus’ first 300 seater long-range widebodies, the 777-200ER and A340-300 in Part 3, we now fly them both on the route Paris to San Fransisco to understand their economics.
The A340-300 was first on the market, but when the 777-200ER arrived amid changed ETOPS rules, the four holer found the twin a difficult competitor. We use our airliner performance model to understand why.
Summary
- The A340-300 has about the same payload-range performance as the later introduced 777-200ER.
- Its economics is competitive with the 777-200ER, yet sales dried up when the 777-200ER became available. We explain why.
Pontifications: New GE Aviation CEO will face big challenges
By Scott Hamilton
June 1, 2020, © Leeham News: The new chief executive officer for GE Aviation (GEA) will face huge challenges when he or she succeeds David Joyce when he retires this year, say industry sources. Joyce was named CEO in 2008.
Like other sectors of commercial aviation, the COVID-19 crisis hit GEA hard.
Initially, the workforce was cut by 10% in March. This was deepened to 25% in May. Non-essential spending was cut. A hiring freeze was implemented and other cost-cutting measures were put in place.
Summary
- Demand for new airplanes tanked. The Boeing 737 MAX, powered by CFM LEAP engines, has been grounded since March 2019. No return to service is in sight. (GE is a 50% partner in CFM International, which makes the LEAP.)
- LEAP engines on the 737 and the competing Airbus A320neo family fall way short of on-wing targets. Shop visits, under warranty, add to GE’s cost basis.
- The Boeing 777-9, powered by the GE9X, is already a year late. A redesign of some critical parts of the engine was required.
- COVID also decimates the engine aftermarket business, which is core to the OEM business model.
Supply chain focus: Safran’ s first 2020 quarter
By Bjorn Fehrm
May 5, 2020, ©. Leeham News: Next out in our COVID19 supply chain focus is Safran Group.
Safran, together with GE Aviation, is the largest supplier of turbofan engines to the World’s airliners. Their success in the CFM joint venture is unprecedented. The first joint engine, the CFM56 has passed 30,000 deliveries, and the follow-up, the CFM LEAP, has 16,000 orders.
At the back of this successful business, Safran has expanded to a major aeronautical supplier for propulsion, systems, and cabins.
Engine OEMs forecast big hit to aftermarket revenue
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By Scott Hamilton
May 5, 2020, © Leeham News: The COVID crisis will damage the aerospace aftermarket in ways that are only beginning to be understood.
As key companies report 1Q earnings, it’s clear that engine aftermarket revenue is going to take a major hit for years to come.
Engine companies like CFM, GE Aviation, Pratt & Whitney and Rolls-Royce, rely on aftermarket sales as the key component of their business plans.
The research and development money that goes into an engine consumes such huge amounts of cash that the OEMs don’t recoup their costs for 10-20 years. The aftermarket for parts, maintenance, repair and overhaul is where they make their profits in the meantime.
But this is seriously threatened by the virus crisis.
“The aftermarket for key programs took 4+ years to return to 2008 levels out of the Great Financial Crisis, and that was with traffic decline at a fraction of the declines today,” Bernstein Research wrote in a May 4 note to clients.
“We’re sick and tired of new technologies:” Avolon CEO
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Introduction
By Scott Hamilton
March 16, 2020, © Leeham News: “I can tell you from our perspective, we’re kind of sick and tired of new, new technology. It’s not proven to be the home run.”
This blunt assessment comes from the chief executive officer of the big aircraft lessor, Avolon.
Domhnal Slattery
Domhnal Slattery, the CEO, was giving his critique of whether Boeing should launch a new airplane once the 737 MAX crisis is over.
Boeing was on a path to decide whether to launch the New Midmarket Airplane when the MAX was grounded one year ago this month.
Airbus was waiting for Boeing to move before deciding how to respond.
Summary
- Airbus and Boeing should “stick to their knitting.”
- Focus on incremental improvements for now.
- 2030s to 2050s will be the next big advance in technologies.
Bjorn’s Corner: Why e in ePlane shall stand for environment, Part 3. Open rotor revisited.
January 3, 2020, ©. Leeham News: We continue our series why e in ePlane shall stand for environment and not electric.
Our target is to lower air transport’s environmental footprint and we can achieve this more efficiently by using established technologies. As an example, I will describe a very promising concept that has fallen out of focus due to the hype around everything hybrid and electric.
Figure 1. The Clean Sky IRON project aircraft with an Unducted Single Fan (USF) propulsion. Source: Clean Sky.
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Several aircraft programs beset by engine woes
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By Judson Rollins
Nov. 25, 2019, © Leeham News: Nearly every manufacturer of jet engines is experiencing problems with various models, which is causing delays for several prominent Boeing and Airbus programs. The Airbus A220, A320neo, A330neo and Boeing 787, 777X are all experiencing engine-related setbacks.
Grounded 787s at London Heathrow. Source: Twitter / Alex Macheras.
Summary
- Pratt & Whitney geared turbofan (GTF) operational limitations on A220, A320neo.
- CFM LEAP said to be causing renewed A320neo delivery delays.
- Multiple new airworthiness directives on Trent 1000, 7000.
- GE9x component issues causing delays to first 777X test flight.
A380 service life struggles
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By Vincent Valery
Introduction
Sep. 30, 2019, © Leeham News: It hasn’t been an easy year for the Airbus A380 program since the end of production was announced in February.
Lufthansa announced in March that Airbus would buy back six A380s in 2022/2023 as part of a follow up order for 20 A350-900s. Air France intends to retire its Superjumbo fleet by 2022. Emirates retired two aircraft that were less than seven years old.
A number of factors are leading airlines to prematurely retire their A380s.
Summary
- Small MRO market increases maintenance costs;
- (Prohibitively) expensive cabin refurbishments;
- Operators struggling to operate profitably year-round;
- A lack of secondary market;
- No business case for engine PIPs.
Paris Air Show, Day 2: Orders and commitments
June 18, 2019, © Airfinance Journal: Boeing received a much-needed vote of confidence in its grounded 737 Max aircraft with a commitment for 200 of the type from IAG. 
Nonetheless, the US manufacturer failed to register a firm order from the second day in a row.
Airbus, in contrast, continued to build momentum for its new A321XLR with orders and commitments from IAG and Cebu Pacific.
CFM also had a good day, registering big orders from lessors and AirAsia for its LEAP engine.
Stabilizing 737 production is Boeing’s priority, CFO says
By Dan Catchpole
June 5, 2019, © Leeham News: Boeing is focused on smoothing out 737 production at 42 aircraft a month for now. Any decision to returning production to 52/month is well down the road, Boeing CFO Greg Smith said Wednesday at the UBS Global Industrials and Transportation Conference in New York.
“It’s going to be all about stability,” Smith said. “And stability is not just about on schedule but ensuring that we’ve got predictability and accuracy that’s more finite than what it’s been in the past.”
The company had planned to step up production from 52/month to 57/month in June or July. Boeing slowed down production of the workhorse single-aisle in April after a second 737 MAX crashed shortly after takeoff. At the time, it cited the accidents as the reason for slowing 737 production. However, the aerospace giant already had been struggling with production disruptions prior to the crashes. The biggest headache came from slow deliveries from engine-maker CFM, as LNA reported in April.
Industry insiders at the Aviation Week MRO Americas conference in April said Boeing already planned to hit 57/month in September. However, at Wednesday’s investor conference, Smith’s sidestepped any question about when 737 production could reach that pace.