Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- How good is the C929? Part 2. April 24, 2025
- Boeing First Quarter Results Update: China is 10% of the backlog, with 500 in “Unidentified” April 24, 2025
- Boeing First Quarter Results: Tariffs, Return flights, $10.55bn asset sale April 23, 2025
- RTX Q1 2025 Earnings: GTF Talk Takes A Back Seat To Tariffs April 22, 2025
- Tariffs Tumult Takes Over GE Aerospace Q1 2025 Earnings Call April 22, 2025
Odds and Ends: A320ceo production to end in 2018–PW; responds to 777X RFI
A320 Current Engine Option: The Airbus A320ceo production will end in 2018, according to David Hess, the president of Pratt & Whitney. Hess made the remarks today at the annual PW media day.
Hess said PW anticipates delivering an aggregate of 8,000 V2500 engines by the time the A320ceo winds down.
GTF to have >1m hours by year-end 2015: Hess also said the GTF will have accumulated more than 1m hours of tests and operations by the end of 2015 and more than 3m hours by the time the Boeing 737 MAX enters service in 4Q2017.
PW revenue will double from $12.7bn today: Hess said revenue will double by the end of 2020, driven by the GTF and aftermarket support. “The engines that we are developing today will define PW.”
Second GTF variant enters flight test: The Mitsubishi variant of the GTF made its first flight yesterday.
PW responds to Boeing RFI for 777X engine: in the 90,000-100,000 lb class. The benefits of GTF grow the larger the engine, says Hess.
Odds and Ends: ‘We’re happy with LEAP, confident it will meet target’
During the Boeing 1Q2012 earnings call, CEO Jim McNerney had this to say about the story that won’t die (that Boeing continues to look at the PW Geared Turbo Fan for the 737 MAX):
The gear turbo fan, the — yes. The — right now, as I think we’ve announced many, many times, we are working exclusively with CFM on the MAX, and we’re very happy with the development there. We’re confident that we can meet the targets that our customers need and that we’ve promised them. So that’s our plan going forward.
“Right now.” Was this a Freudian slip or an inconsequential choice of words?
Boeing likes American Airlines as stand-alone: McNerney also said Boeing prefers AA to emerge from bankruptcy as a stand-alone airline. This is no shock; the US Airways management is exclusively Airbus, and while American strayed from Boeing last year, it still placed a large order for 737NGs/737 MAXes.
McNerney talks about pricing: I think the summary on pricing is 777 steady, steady as she goes, capturing value, in many ways a uniquely positioned airplane today and significant productivity associated both with better conversion and with taking up rate. So the margin environment there, I would say, is good and favorable going forward. 37, all of the comments I just made on productivity apply. Significant productivity, both absorption kind of productivity due to increased rate as well as conversion productivity per unit. Slightly more aggressive pricing environment due to the introduction of the MAX and the NEO. So there’s launch customer kinds of pricing that have happened in a few cases. But I think at the end of the day, the — we anticipate about half of that market, which is a big number. And we see a pricing environment that’s not too different than the pricing environment we’ve had historically after we get through some of the launch customer — loss — launch customer pricing, which is part and parcel with our business.
[Source for all the quotations: Seeking Alpha Transcripts.]
We are hearing there essentially is a price war going on right now between Airbus and Boeing for single aisles, as Boeing attempts to stem the inroads and success by Airbus with the A320neo. In this case, we’re hearing Boeing is the aggressor (which follows, since it is playing catch-up).
Boeing won Delta Air Lines on the 737-900ER v A321 competition largely on price, we understand–bidding 10% lower than Airbus. We also believe price is likely the determining factor in the soon-to-be-completed United Airlines deal, where Boeing is widely reported to now be the favorite.
Another story that won’t die
We’ve recently tagged a few items “a story that won’t die.” Here is another one, the continuing analysis of the Pratt &
Whitney GTF for the Boeing 737 MAX.
Although Boeing’s Lauren Penning told The Puget Sound Business Journal there isn’t a “team” at Boeing working on this prospect, reports out of Aspire Aviation (now Orient Insight), Aeroturbopower, Airline Economics and last month’s ISTAT meeting continue to create buzz on this topic. The AirInsight piece was published in limited circulation two weeks ago.
Boeing reveals some MAX details, at last
Boeing has, at long last, revealed some details about the 737 MAX, most of which have long been talked about in various media. Boeing is further testing new wingtip designs–with or without winglets? And while readers cite this articlein our previous post linking AirInsight about winglets in an effort to discredit the conclusions, the last paragraph is noteworthy:
For the forward-fit market, LaMoria sees a “very healthy” business for Boeing 737s for the “next 5-6 years”, but there is no guarantee the company will select APB blended winglets for the GE Leap-1B-powered 737 Max, set for entry into service 2017. “We have a lot of long-lead future-oriented plans in place in hopes of working with Boeing for many years to come,” says LaMoria. “But Max is still an open question.”
Separately, see this Aeroturbopower article.
PW GTF-CFM LEAP market share
AirInsight has an interesting analysis of the market share of the GTF vs the LEAP on the A320neo family. This was completed while the Singapore Air Show was underway and orders still being announced.
The analysis only covers the neo family, where there is competition between CFM International and Pratt & Whitney. CFM is exclusive on the Boeing 737 and COMAC C919 and PW is exclusive on the Mitsubishi MRJ and the Bombardier CSeries. PW shares the engine supply position on the Irkut MS21 with a Russian powerplant.
Thus, the neo family competition provides a better snapshot of how the two engines stack up in the view of customers.
A couple of points of note for the AirInsight analysis: GECAS buys only GE engines, so PW had no chance in this exclusive-supplier scenario; and Republic’s CFM selection was part of a financial rescue package involving GECAS (which leases A319s and A320s with CFM engines to Republic subsidiary Frontier Airlines) and CFM (which restructured CFM maintenance agreements). We detailed the Republic order at the time. We also wrote this piece about how the GE powerhouse combines to win deals. The family deal with GECAS and the rescue package for Republic account for 280 of the 533 LEAP engines ordered to-date.
Separately, we’ve been provided some diagrams by CFM for publication about the LEAP and how its architecture and technology benefit from the GE90 and GEnx. These illustrations are below the jump.
Boeing MAX v Airbus NEO; Fan size and optimizing the LEAP for MAX, Part 2
The war of words between Airbus and Boeing continued unabated at the Pacific Northwest Aerospace Alliance 11th Annual Conference this week in suburban Seattle.
As fully expected, Airbus said its planes are better than Boeing and Boeing said its planes are better than Airbus. No news there.
But Boeing revealed a little bit more detail on the 737 MAX vs the A320 neo that suggests their analysis gives another percentage point advantage than was originally announced last August.
When MAX was announced, Boeing claimed, “The airplane’s fuel burn is expected to be 16 percent lower than our competitor’s current offering and 4 percent lower than their future offering” and “It will have the lowest operating costs in the single-aisle segment with a 7 percent advantage over the competition.” The slide shows an additional 1% advantage for fuel burn over neo and 17% over A320CEO (Current Engine Option, as Airbus now calls it), of +5 (VS 4) and +17 (vs 16). We asked Boeing about this, and we’re told the slide reflects rounding up the numbers and not an actual increase in the previously announced economic claims.
Randy Tinseth, VP Market, showed this slide (click on the slide to enlarge), the first time we’ve seen one like it. The slide shows the improved fuel burn minus the negative impact of additional weight and drag to come up with net figures.
What is also useful is that Boeing includes in the illustration the existing and planned fan diameters for the 737-800, the A320 and their successor airplanes. The assumptions used in the analysis are also listed on the slide.
Airbus disputes the underlying Boeing analysis as well as claiming the assumptions used favor Boeing instead of real-world operating conditions. We covered the Airbus detail following ISTAT’s European Conference in Barcelona. We sought out Boeing at that time in order to include their detail in that posting; Boeing declined. Boeing held a tele-conference November 4, but it could only be characterized as a high-level look at the program. We’ve been trying for months (since last June, in fact) to follow up their briefing in advance of the Paris Air Show and Boeing has been declining all interview requests on MAX.
CFM has likewise declined interview requests (three since August, when MAX was launched). Both companies have left the marketplace in a fog. But information obtained from customers, from Boeing and from within CFM has now painted a reasonable picture of how Boeing and CFM support their claims that the 737 MAX will be more economical than neo and how the LEAP is being optimized for MAX. In addition to the Airbus position, it should also be noted that at least one airline analysis of the MAX vs neo concludes that MAX will only be around 2% better than neo, not the 7%-8% lower operating costs claimed by Boeing.
The purpose of this post is not to attempt an independent analysis, but rather to explain why Boeing and CFM make the claims they do. This report is the result of months of talking with customers and sources within Boeing and CFM; and from public appearances by Boeing and CFM.
Optimizing LEAP for 737 MAX
There has been a great deal of debate over whether Boeing can meet the SFC reduction targets for its 737 MAX. This debate revolves in part because neither Boeing or CFM have been forthcoming about details how the CFM LEAP engine is being optimized for MAX.
We’ve obtained some details to explain how CFM is proceeding.
Details are still sketchy and hard to come by. But our source has direct knowledge of the program.
Our source compared the requirement to reduce the fan size of the 737 LEAP from 78 inches on the Airbus A320 neo to 68 1/2 inches on the MAX to the fan reduction on the GEnx from the 787 to the 747-8. The 747-8 engines are optimized for this aircraft despite the smaller fan size.
Reducing the fan enables CFM to eliminate some LPT stages, our source explains, which also cuts other parts.
This eliminations allow the LEAP to be shorter, which also allows the engine mounting to be shorter.
CFM is also using ceramics to the MAX LEAP.
These are some of the key ways CFM is optimizing LEAP for MAX.
CFM aftermarket drives Safran revenues, profits
A recent report by Bernstein Research takes an in-depth look at Safran, the French company that is the parent of Snecma, a joint venture partner with GE to form CFM International.
CFM, of course, is the sole-source engine provider on the Boeing 737 and has about half the market share on the Airbus A320 family.
In the January 17 note, Bernstein looks at the after-market engine business of Safran, which is dominated by the CFM56. There are nearly 17,000 CFM 56 engines in service today, mostly what Bernstein calls the second generation.
Bernstein’s report illustrates what we have occasionally written: the importance of after-market parts sales and MRO (maintenance, repair and overhaul) is to the engine market.
We’ve noted previously that the after-market is more important than the sale price of the engine where there is competition for a power plant.
As we’ve previously noted, it is not unknown for engine makers to deeply discount engine prices even more than the airframers discount their airplanes. In the lawsuit between Pratt & Whitney and Rolls-Royce over patent claims for the engines powering the Airbus A380, court documents revealed discounts as steep at 80% or more.