Aeroflot, the route to a modern airline, Part 2

By Bjorn Fehrm

April 19, 2017, ©. Leeham Co: In our second article about Aeroflot, the Soviet Union flag carrier that transformed to a modern airline, we will cover the period from the fall of the Soviet Union until 2010.

This was the difficult period for all participants. The old structures no longer existed and were replaced with… nothing, followed by uncertainty and a long struggle to get back to normal.

Figure 1. IL-96-300, a Soviet long range aircraft which stayed in the Aeroflot fleet until 2014. Source: Aeroflot.

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Irkut MC-21 missing ultimate load test

By Bjorn Fehrm

April 05, 2017, ©. Leeham Co: United Aircraft’s IRKUT MC-21 passed 90% of the static Ultimate load test end February at the TsAGI test institute in Moscow, reports ATO.RU. But the aircraft failed the 100% test.

The test simulates a load which is 150% higher than the highest load that the aircraft should be subject to in its operational life. The test failure does not stop the aircraft from beginning flight testing, for that the aircraft needs to pass the limit load test (highest load during flight), which it has.Missing the Ultimate load test for new airliners is nothing unusual. The designers tries to pass this test with the smallest possible margin. Any excess margin will make the aircraft unnecessary heavy.  Other aircraft to have missed the test are Mitsubishi Aircraft’s MRJ, Airbus’ A380 and Boeing’s 787.

According to ATO.RU, who quotes IRKUT, the reinforcements in the wingbox necessitated by the failure will weigh 25kg. It’s not clear if the changes will affect the start of test flights. These should have started during April.

Boeing Services expansion wise, necessary move

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Introduction

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.

Summary
  • Airbus, Boeing single-aisle prices under pressure.
  • A330/350 keeps 787 pricing down.
  • Boeing’s NMA business case may depend on after-delivery services contracts.

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Assessing the MC-21 future

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Introduction

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

Irkut MC-21 at roll-out. Photo via Google images.

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.

Summary
  • EIS planned for next year, but first flight hasn’t happened yet.
  • Few orders, small customer base.
  • Russia itself presents an overhang to the MC-21 program.
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Aircraft list prices largely unchanged (Updated)

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.

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Bjorn’s Corner: Turbofan developments in 2017

By Bjorn Fehrm

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.

Figure 1. GasTurb principal representation of a three shaft turbofan like our reference Rolls-Royce Trent XWB. Source: GasTurb.

 

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.

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2017: the year ahead

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Introduction

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.

Summary
  • Wide-body sales remain weak.
  • Narrow-body backlogs and low oil prices continue to inhibit sales.
  • China, Middle East concerns emerging.
  • United Aircraft MC-21 and COMAC C919 begin flight testing.
  • Airbus A330neo, Boeing 787-10, Embraer E195-E2 and Mitsubishi Aircraft MRJ-70 roll-out and begin flight testing.
  • Airbus A321neo and Boeing 737 MAX 8 EIS.

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US, EU ignore Chinese, Russian subsidies

Nov. 15, 2016, © Leeham Co.: Government subsidies to commercial aircraft companies appear to be increasing despite the 12-year disputes before the World Trade Organization between Europe and the US over Airbus and Boeing aid.

Yet the US and Europeans appear to be doing little to try and curb the subsidies to new competitors.

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Clouds overhang Bombardier ahead of earnings call

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Introduction

Nov. 9, 2016, © Leeham Co.: Bombardier reports its 3Q2016 and nine month earnings Thursday and as the year prepares to enter its last 45 days, disappointment hangs over the company and the stock.

Summary
  • Despite winning firm orders for the CSeries from Air Canada and Delta Air Lines early in the year, no other new orders have been announced.
  • Deliveries of the CSeries will only be about half those projected, due to engine delivery delays from Pratt & Whitney.
  • The $1bn investment from the federal Canadian government hasn’t been achieved, but an announcement may come as early as next week that an agreement has been reached.
  • Boeing revised the design of the 737-7 to sit “right on top of” the CS300.
  • Embraer (Brazil) is taking the government bailout of CSeries to the World Trade Organization (WTO) in inquiries, with the USA lending support.

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Less desirable aircraft for lessors

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Introduction

Part 3: Oct. 24, 2016, © Leeham Co.: Lessors select aircraft to add to their portfolios based on several basic criteria:

  • Is it a good airplane?
  • How are the economics?
  • Is there, or will there be, a broad customer base?
  • How “liquid” is the airplane?
  • How broad is the customer base?
  • Reconfiguration costs.
  • Commercial terms of the acquisition.

Lessors often conclude that while an airplane may be good technically and perfectly acceptable for airline use, failure to meet their specialized key criteria—notably liquidity and customer base—they may pass on the aircraft.

Summary

  • A surprising number of in-production jets and those in development don’t make a lessor’s list of desirable leasing assets.
  • The planes all are technically good aircraft.
  • Markets may evolve for some of the aircraft on the list.

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