April 14, 2017, ©. Leeham Co: We’ve been talking engines on Fridays since October 2016. The Corners covered several areas, from technologies to operations.
And we could go on and dig deeper. But we will move on.
Before we go, we sum up what we have learned in the 24 Corners around airliner Turbofans.
March 16, 2017, © Leeham Co.: China’s evolving commercial aerospace and aviation industry has high-profile companies such as AVIC and COMAC, and its expanding supplier based, combined with joint ventures with Western companies is well known.
Less well known is the growth in the aircraft leasing business. Increasingly, Chinese lessors are showing up on the order lists of the Big Four aircraft manufacturers. Still, there remains a bit of a mystery about the lessors and dynamics within China.
LNC spoke with the newly appointed CEO of CDB Leasing during the ISTAT conference last week in San Diego.
Peter Chang has been in the Western leasing business for decades, employed in key positions with Aviation Capital Group, ILFC and Aircastle—usually with responsibility for China.
He was named CEO of CDB in December, a move that was announced during the January Dublin conferences of Airlines Economics and Airfinance Journal. More key personnel announcements were made during ISTAT.
In an exclusive interview, LNC asked Chang about the origins of CDB, other Chinese lessors, the current policy of restricting flow of Chinese cash outside the country, the Boeing 737-10 and the Bombardier CSeries.
Here is this interview.
March 7, 2017, © Leeham Co.: Representatives of the four major commercial engine
manufacturers have divergent views of the next round of engine development, either for the Middle of the Market/New Mid-range Airplane (NMA) or New Small Airplanes (NSA) coming in the next decade.
Officials of CFM, GE, Pratt & Whitney and Rolls-Royce appeared at the annual ISTAT conference in San Diego yesterday.
PW’s Rick Deurloo, SVP of Sales, Marketing Commercial Engines, had the added task of dealing with the highly-publicized teething issues surrounding its new Geared Turbo Fan engine on the Airbus A320neo.
March 6, 2017, © Leeham Co.: Boeing CEO Dennis Muilenburg wants the company to participate in the aftermarket aircraft services business and set a goal of $50bn in revenue in the coming years.
He looks at Boeing’s current business, the former Boeing Commercial Aviation Services (CAS), and sees a single-digit market share in a worldwide trillion-dollar market potential. Muilenburg understandably wants a greater share of this.
But LNC believes there is an additional driver: the intensely competitive commercial airliner business faces even greater competition in the coming years. Prices are under pressure today. China is developing its own aerospace industry, which will eat into sales by Boeing (and Airbus) in the home market. Russia has ambitions to renew its home-market airliner industry.
Boeing’s new Global Services unit is a hedge against the prospect of falling profits at Boeing Commercial Airplanes as these factors converge.
BRG, which agrees with other aerospace analysts that Boeing stock is priced on free cash flow, sees FCF falling beginning next year. Buckingham predicts 737 production rates—which Boeing wants to boost to 57/mo to support FCF—will be short-lived.
Buckingham sees 777 Classic delivery rates dropping from Boeing’s target of 3.5/mo to “bottom out” at 2/mo.
Weak orders for the 787 means Boeing won’t increase production rates for the 787 from 12/mo to 14/mo. BRG predicts that in 2019 Boeing will announce a rate reduction from the current 12.mo to 7/mo on one production line, and this line will be only in Charleston (SC).
Boeing VP-Marketing Randy Tinseth speaks tomorrow at the annual Pacific Northwest Aerospace Alliance conference in Lynnwood (WA). Tinseth is always the eternal optimist in his presentations. We’ll see if he addresses anything in BRG’s bearish report.
Feb. 9, 2017, © Leeham Co.: Russia’s Irkut designed a mainline jet to compete with the Airbus A320 and Boeing 737 families that, from a passenger experience
viewpoint, is the best in class.
The MC-21 has a wider fuselage than the A320 (which is wider than the 737). Seats and the aisle are the widest in the class. The overhead bin space is plentiful.
But the airplane is hampered by its environment: Russia itself.
Feb. 6, 2017, © Leeham Co.: China’s effort to become a viable commercial aerospace alternative was filled with rocky fits and starts for its two signature airliner programs, the AVIC ARJ-21 and the COMAC C919.
COMAC, a spin off from AVIC and yet another government-controlled entity, is already casting eyes on a 250-seat, twin-aisle design, the C929—ostensibly in a joint venture with Russia’s United Aircraft Corp.
The ARJ-21 regional jet finally entered service after delays of eight years. The C919 target EIS is now 2019, six years after the original date. The first flight hasn’t even taken place.
Chinese officials set a target EIS for the C929 of 2026.
A rough road remains ahead for each program.
Update: Airbus Jan. 11 announced a 1% list price increase. The chart has been updated.
Jan. 10, 2017: Aircraft list prices are largely unchanged for 2017, the airline industry demand cools for new aircraft.
Sales in 2017 were down for the Big Two, Airbus and Boeing. Boeing announced orders for 688 aircraft, well off of last year, which also was a major decline from the year before.
Airbus announces tomorrow, with sales expected to be in a similar range.
Bombardier and Embraer announce later this month or next.
LNC compiled the current list prices from all the manufacturers, detailed in Figure 1 below.
Airbus and Boeing discounts typically range from 40% to 60%, depending on the customer, the airplane and the size of the order. BBD and EMB discounts may also be steep, depending on the campaign.
The balance of this article is for Subscribers only.
January 06, 2017, ©. Leeham Co: Before we finish of our series on airliner turbofan technology, let’s spend this Corner on what will happen on the airliner engine front during 2017.
While there is no totally new engine that comes into the market during 2017 there are a number of new variants of existing engine families that will be introduced.
If we start with the engines for regional/single aisle aircraft and then climb the thrust scale, we will cover the engines in climbing thrust class.
Jan. 3, 2017, © Leeham Co.: The New Year is here and it doesn’t look like a good one for commercial aerospace, if measured against previous outstanding years.
There are some troubling signs ahead, piling on to a slowdown in orders from last year that didn’t even reach a 1:1 book:bill.
This year looks to be worse than last. Airbus and Boeing will give their 2017 guidance on the earnings calls this month and next. Bombardier and Embraer earnings calls are a ways off, when each will provide its guidance.
But LNC believes the Big Two in particular will be hard pressed to hit a 1:1 book:bill this year and may even struggle to match 2016 sales.
Boeing’s year-end order tally comes Thursday. Airbus’ comes on Jan. 11.