We’re feeling irreverent today….
From Twitter: Boeing Defense @BoeingDefense In Sept issue of #Boeing Frontiers: With #Apollo roots, Boeing has grown to be largest #aerospace employer in #Alabama http://ow.ly/dB0Ef
Comment: We remember when Boeing said Alabamans couldn’t build a tricycle (during the bitter competition for the KC-X tanker).
Hunker Down: We’re going into the bunker on this one–Washington should become a right-to-work state. In 2008, IAM 751 (during its strike) boasted WA is the fourth most-unionized state in the country. We know this inhibits expanding aerospace here. We’ve heard it from companies. We’ve heard it from the head of one of the Economic Development Commissions here that unions are the first topic to come up when he is recruiting companies to expand here. We don’t object to unions per se but we don’t think someone should be forced to join one. (That’s how we feel about Republicans, too….)
Take two Viagra and try again: The refueling boom was being extended when it fell off an Airbus KC-30 during a test flight.
Thank you for smoking: Airbus is really pushing Europe to delay implementation of its emissions trading scheme, which jeaopardizes orders from China. Despite the sarcasm, we agree with Airbus–any regulations through be through ICAO, not on Europe’s own, ill-advised hook.
Macht nichts: No AirAsia order at the Berlin Air Show after all. The airline will be the first to operate the A320neo and the airplane with sharklets.
Macht nichts, II: MTU is a partner with Pratt & Whitney on the Geared Turbo Fan for the Mistubishi MRJ, the Bombardier CSeries, Irkut MS-21 and the A320neo but looks to join GE for the new engine for the Boeing 777X.
Posted on September 11, 2012 by Scott Hamilton
Airbus, Boeing, Bombardier, CSeries, Irkut, Pratt & Whitney
777X, A320NEO, AirAsia, Airbus, Alabama, Boeing, Bombardier, CSeries, IAM 751, Irkut, KC-X, Mitsubishi, MRJ, MS-21, MTU, Pratt & Whitney, Washington State
Boeing rolled out Ray Conner, the new CEO of Boeing Commercial Airplanes, to analysts in New York yesterday. The first research note we’ve received, from Imperial Capital’s Ken Herbert, portrayed a positive meeting. Below is a synopsis. As we receive more notes, we’ll add those comments.
We don’t like the resumed policy of using cash to repurchase stock, instead of putting it into new airplane programs (something Richard Aboulafia of the Teal Group, normally a pro-Boeing consultant, has roundly criticized for years).
Imperial Capital
We believe BA is benefitting from several tailwinds, and is demonstrating increased confidence regarding its 787 execution and the ability to take further costs out of the supply chain. However, we believe much of the good news is reflected in BA stock, and we see slowingorders in 2013 as limiting the multiple; therefore, we are maintaining our In-Line rating. Investors areexpecting a significant dividend increase or share repurchase program, which could be a positive catalyst, but we see the new program developments, which include the 737MAX, the 777X and 787-10, as potential competing cash pulls.
Regarding the 787, Boeing confirmed that Charleston is ahead of plan, but that it has been staffed to over deliver. Boeing also made a point of stressing that its movement down the cost curveon the 787 will be similar to that of the 777. We believe that there is an opportunity for Boeing toexceed expectations on the 787.
We continue to believe, however, the much of the execution upside is priced into Boeing stock. We believe that in order for the stock to see material upside, Boeing needs to demonstrate a very bold use of the expected free cash flow, in the form of both increased dividend and share repurchases, that will attract new investor interest and accelerate the EPS growth. However, this will limit the new product development options, considering the potentially competing development requirements of the 737MAX, the 787-10, and the 777X. We believe current BCA leadership wants to do both the 777X and the 787-10, and believes that there is significant pent-up order demand for both new aircraft, but we believe the focus on share repurchases and/or the dividend, reiterated at the 8/28/12 reception, could push some development effort to the right.
Separately:
Posted on August 30, 2012 by Scott Hamilton
737 MAX: Boeing Frontiers Magazine has a long article with lots of pictures describing the designing process of the Advanced Technology Winglets.
RR-PW on big engines: Aviation Week has this article speculating on the prospect of Rolls-Royce and Pratt & Whitney teaming to offer an engine for the Boeing 777X.
CFM says the use of advanced materials will reduce fuel consumption in the LEAP-1A (Airbus) engine by 1.5%, which happens to be the amount John Leahy of Airbus said that PW’s GTF has an advantage over LEAP.
Posted on July 16, 2012 by Scott Hamilton
McNerney rejects “price war.” A quote from a Financial Times story (see below).
He rejected suggestions that a price war had broken out between Airbus and Boeing over the A320 Neo and 737 Max but confirmed the US manufacturer would woo some airline customers of its European rival.
Courtesy of Aspire Aviation, here is a summary of orders through Day 1:
Airbus
Date |
Customer |
Quantity |
Model |
Remarks |
9th July |
Arkia Israel Airlines |
4 |
A321neo |
Agreement |
Boeing
Date |
Customer |
Quantity |
Model |
Remarks |
9th July |
Air Lease Corp (ALC) |
60 |
737 MAX 8 |
Reconfirmation rights for 25 more |
9th July |
Air Lease Corp (ALC) |
15 |
737 MAX 9 |
|
Pratt & Whitney
Date |
Customer |
Quantity |
Model |
Remarks |
9th July |
IndiGo |
300 |
PW1100G-JM |
|
9th July |
CIT |
60 |
PW1100G-JM |
|
9th July |
Cebu Pacific |
60 |
PW1100G-JM |
For 30 firm A321neos |
9th July |
Norwegian Air Shuttle (NAS) |
100 |
PW1100G-JM |
MoU |
CFM
Date |
Customer |
Quantity |
Model |
Remarks |
9th July |
Air Lease Corp (ALC) |
150 |
CFM Leap-1B |
|
Embraer
Date |
Customer |
Quantity |
Model |
Remarks |
9th July |
Hebei Airlines |
5 |
E-190s |
Booked in Q2 backlog |
Reuters put together a handy-dandy thing to calculate airplane prices easily. These are list prices, of course.
Some stories of note:
United to announce big MAX order July 12
AirInsight is posting daily news and videos.
The Financial Times of London has a piece with Boeing’s Jim McNerney. (Free but limited registration required.) Here’s a relevant quote.
Boeing announced the 737 Max in August last year and Mr McNerney said that “in retrospect” the US manufacturer should have made its decision to proceed with a revamped version of its narrow-body workhorse, rather than a brand new aircraft, “six to nine months” earlier.
Posted on July 9, 2012 by Scott Hamilton
We’re all used to Airbus and Boeing engaging in hand-to-hand combat. The war has now spilled over to CFM and Pratt & Whitney and the LEAP engine vs the GTF.
There have always been some sharp words. But according to these two stories from Guy Norris at Aviation Week, the tone has now gotten even sharper.
CFM claims big advantage over GTF.
We’re puzzled by CFM’s claim (in the first story) that the LEAP will have a 2%-2.5% advantage in fuel burn over the GTF. Airbus gives a 1.5% advantage to GTF because of the larger fan (John Leahy, Credit Suisse conference Nov. 30, 2011). CFM claims a 15% SFC gain over today’s engines; PW claims 16% SFC gains (pre-installation) for its GTF and flying test results bear this out, PW says.
CFM has a larger market share of aircraft over 100 seats, because of its exclusivity on the 737 MAX. CFM also has a larger share of the A320neo family, the only airplane where there is head-to-head competition, bolstered by the policy of sister company, lessor GECAS, of buying only GE engines; and a financial rescue of Frontier Airlines, which has a CFM-powered A320 fleet and which ordered the A319neo/320neo at the Paris Air Show last year with LEAP engines.
It’s noteworthy in the first article that the LEAP-1B for the 737 MAX shares little commonality with the LEAP-1A and LEAP-1C. This reflects the challenges of fitting a LEAP under the wings of the physically-constrained 737, which basically required another core design.
Separately, here is a story about the materials and process used for the LEAP.
Posted on July 8, 2012 by Scott Hamilton
Overview
This is really expected to be a boring show from the perspective of orders. Airbus has been downplaying expectations following last year’s Paris Air Show blow-out of more than 1,200 A320neo orders. How can you match that? The answer is, Airbus can’t.
Boeing will certainly firm up hundreds of 737 MAX commitments, so this will be Boeing’s show. And there is the buzz that Boeing is partnering with Lockheed Martin and NASA (oh, another government subsidy?) to produce a 2,500 mph SST, with details supposed to come at the Air Show. Then there is the leak that the 787 will fly there, the first time in 28 years Boeing has an aerial flying display.
We’ve talked with several journalists and industry personnel who are skipping the Air Show this year. So are we, and we’ve been at the Farnborough and Paris air shows since 2008. We just don’t expect enough news this year that we can’t get from the press releases.
So here are our expectations for the show:
Posted on June 26, 2012 by Scott Hamilton
787 fuel burn: Aviation Week has this story about the early fuel burn results for the Boeing 787 beating expectations (which admittedly were tamped down because of the program difficulties). Some of this has been reported before. What caught our eye was the detail about the GEnx engine. Why? Because the CFM LEAP-1B derives much of its technology from the GEnx, including the higher temperatures fleetingly referenced in the AvWeek piece.
CFM is relying on high temperatures to achieve the fuel burn required by Boeing’s 737 MAX. This is hotly debated (pun intended) between CFM and Pratt & Whitney in the competition between the LEAP and the PW GTF.
CFM advocates that its hotter-running engine, equipped with advanced technology ceramics and other advanced materials, gives it the advantage over PW’s Geared Turbo Fan technology. PW argues that the hotter CFM engine will require more maintenance. Engineers that we ask generally agree that the hotter temperature approach will be a challenge for long-term maintenance but fall back on CFM’s sterling reputation of reliability as a measure of comfort. At the same time, these same engineers–who have no connection to either CFM or PW–like the GTF technology but want to see it proved in service.
Steven Udvar-Hazy said it best. It will be five to seven years after the engines are in service before the industry knows the reliability and performance of either engine’s advanced technology.
Posted on June 26, 2012 by Scott Hamilton
737 MAX, 787, Boeing, CFM, GE Engines, GEnx, GTF, Leap-1B, Pratt & Whitney
Note to Readers: In May, we attended the Pratt & Whitney media day, followed by the Airbus Innovation Days the same month and then the Boeing Pre-Farnborough Press Briefings over two days. This week we attended the Bombardier Farnborough Briefing. Boeing’s briefings are embargoed to July 5. We’re still digesting the PW event to tie information to news in the near future. Bombardier released its 20 year forecast, but we plan to tie that to information that was discussed at the embargoed Boeing briefings.
Bombardier made news with its statement that CSeries is on time. We dug a little deeper, however, and confirmed what had been hinted by Bombardier officials much earlier: that there is no margin left between now and the planned first flight by year-end.
At the same time, we received a run-down on some specific component areas that have been highlighted by analysts as risk areas. Here we go:
Posted on June 21, 2012 by Scott Hamilton
As Airbus and Boeing battle for orders for the current generation A320 and 737 families and for the re-engined models, comparisons between the four sets of aircraft has been difficult to come by.
Furthermore, with Boeing continuing to evolve the MAX–not only with the engine specifications but also the airplane weights–ambiguity sometimes dominates.
Boeing continues to talk with customers about the definition of the MAX, with higher weights under study. Airbus is more advanced, but of course until flight testing confirms figures, nothing is certain.
Over time, information as emerged through Airbus, Boeing, Pratt & Whitney and other statements and information. Aspire Aviation (now Orient Insight) also has been a solid source of information. Our own data gathering has obtained some solid information as well.
From all these sources, we’ve put together the following table. The 737-7 MAX is the murkiest, with little apparent interest so far from the customer base. Taking known facts for the 8/9 MAX, we estimated some of the specifications for the 7 MAX.
What struck us on the NEO is that Airbus specifications for range are greater than has been previously revealed.
We consider the specifications of NEO and MAX still evolving until flight tests for all six sub-types prove design goals.
Posted on May 21, 2012 by Scott Hamilton
Mitsubishi last month announced a delay of more than one year for the MRJ, but was rather vague about the reason.
AirInsight has the detail, following an interview at the Pratt & Whitney media day attended by officials of the Japanese company in town for the first flight of the MRJ’s PW GTF engine.
Posted on May 2, 2012 by Scott Hamilton