Leeham News and Analysis
There's more to real news than a news release.
Airbus exploring higher capacity A350
By Bjorn Fehrm
23 March 2016, ©. Leeham Co: Airbus is showing a select group of airlines a stretched version of the A350-1000. The idea is to get enough feedback from potential customers so that a decision to go ahead or not can be made during the summer. Airbus COO customers, John Leahy, told LNC at the ISTAT conference earlier this month that an announcement could be made at the Farnborough Air Show in July. Other sources say it might take longer.
We have covered the possibility to extend the A350-1000 to a longer 400 seater version in several articles over the years. The key question for Airbus is how large is the market for a dual aisle twin with 400 seats and has Boeing already covered a large part of that market with its 777-9?
What has changed now it that the A350-1000 is taking form on the Airbus Toulouse Final Assembly Lone (FAL) and Airbus can now see that the A350-1000 will hit its performance and weight numbers. Airbus also has a lot of learning from the A350-900 which makes it confident that an A350-1000 stretch can be made with rather small changes.
Bjorn’s Corner: Engine architectures
4 March 2016, ©. Leeham Co: There is a saying, “There’s more than one way to skin a cat.” The same goes for making successful Turbofans to commercial aircraft.
At the recent Pacific Northwest Aerospace Alliance 2016 sub-supplier conference in Seattle, GE, Rolls-Royce and Pratt & Whitney all talked about their latest engine projects and the technology development that was critical to their success.
The engines they talked about, the GE9x, Rolls-Royce Advance and Pratt & Whitney’s Geared Turbofan, can all be characterised as the best of breed for their intended use but they could not be more different in how their level of excellence is achieved.
It made for interesting listening. Here’s the gist of what was told.
ISTAT Day 1: Engine updates for CFM, GE, RR and PW
Feb. 29, 2016, (c) Leeham Co.: The LEAP engine, for the Boeing 737 MAX, Airbus 
A320neo and COMAC C919 is the fastest-selling engine in history, says Jean-Paul Ebanga, the president of CFM International. More than 10,000 have been sold.
- We’re at the 2016 ISTAT AGM in Phoenix and will be reporting today and tomorrow on presentations and news from the sidelines.
“It’s on-time and on-spec,” Ebanga said. It’s either been on the date set four years ago or ahead of schedule. The engines delivered to Airbus for the A320neo are on spec, he said. It’s been certified for the neo and will be certified soon for the MAX, with 90% of the information submitted.
ISTAT Day 1: Used 777 values depend on engines, leases
Feb. 29, 2016 (c) Leeham Co.: The Boeing 777-200ER is not worth $7.7m or even $10m, but $37m to $47m, according to four appraisers who appeared today at the ISTAT AGM.
- We’re at the 2016 ISTAT AGM in Phoenix and will be reporting today and tomorrow on presentations and news from the sidelines.
Doug Kelly of the consulting/appraisal firm Avitas notes that the Rolls-Royce Trent-powered 777s are, indeed, the least desirable airplanes. GE or PW-powered airplanes commands a $7m premium, he said.
AerCap is selling 777-200ERs with leases attached for more than $50m, Kelly said.
PNAA Day 2: Cautionary note raised
- Feb. 10, 2016: Today is the second of three days of conference meetings organized by
the Pacific Northwest Aerospace Alliance (PNAA), in Lynnwood (WA). We’re providing live reporting throughout the three days.
Feb. 10, 2016: Large commercial aircraft deliveries hit just under $104bn in 2015, a 4.9% gain over 2014. Regional aircraft values, however, were just $7.1bn, a decline of 10.5% year-over-year, said Richard Aboulafia, a consultant with the Teal Group.
Deliveries of all aircraft types, including military, rotocraft, etc., saw only a 0.6% increase YOY. Jetliners account for 60% of the total values.
IAG is looking at leasing used A380s
By Bjorn Fehrm
18 January 2016, ©. Leeham Co in Dublin: Willie Walsh, the CEO of IAG (which is the holding of Brittish Airways, IBERIA, Vueling and Air Lingus) spoke at the Growth Frontiers 2016 conference in Dublin about how the new IAG has become more agile in following market changes to opportunistically increase its operational efficiency.
Walsh gave the example of IAG’s aircraft fleets where he announced that it is looking to lease five to six used Airbus A380s in addition to the ones that British Airways (BA) already have on order. These could be aircraft for BA only use but also for a joint BA and IBERIA operation.
Bjorn’s Corner: What did we learn in 2015; engines
By Bjorn Fehrm
15 January 2016, ©. Leeham Co: Last week we looked back on what happened in 2015 on the airframe front. We finish the retrospective by looking at what turbofan engine technology came to market in 2015. New engine technology is vital, as it is on the engine side that the quest for higher fuel efficiency has the largest successes.
While advances on the airframe side might bring an additional 5% per generation, the engines typically increase their efficiency per new generation with up to three times that value. Fuel efficiency per delivered thrust unit was improved with a whopping 15% over the engine it replaces for the Pratt & Whitney Geared Turbofan (PW GTF). It was certified for use on the Airbus A320neo in Q4 2015
The competing CFM LEAP-1A shall deliver the same improvement level to the A320neo once it is certified in the summer of this year. This engine has a smaller sister that started ground tests last year, the LEAP-1B, which is developed for the Boeing 737 MAX series.
The engine that is easily forgotten is the Rolls Royce Trent XWB. It entered service on the Airbus A350-900 during the year. It brings an improvement level of around 10% compared to the engines of the aircraft that the A350 replaces (Airbus A340/A330ceo and Boeing’s 777-200 range).
How good is a used 767-300ER? Part 4
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By Bjorn Fehrm
Introduction
Jan. 6 2016, ©. Leeham Co: We now finish our series of acquiring a used Boeing 767 aircraft to upgrade a Boeing 757-based long haul service. The 767 went out of favor recently as it has higher fuel consumption per seat than competing aircraft like Airbus A330-200.
With today’s low fuel prices and favorable used prices, a well kept 767-300ER is once again an interesting long haul aircraft. In previous articles, we looked at different aspects of the 767-300ER compared with the A330-200. First we compared the aircraft’s characteristics (Part one), then Cash Operating Costs (Part two) and finally Direct Operating Costs (Part three).
We now finish the series with a revenue and margin analysis. First we establish the competitor’s payload carrying capabilities over a trans-Atlantic network. Then we calculate their revenue capabilities using standard yields (revenue per load unit). The revenue and cost data then gives us the operating margins for the aircraft.
Summary
- The 757 has the lowest costs but is considerably more limited in its payload and range capability than the 767 and A330. Its lack in capacity is augmented by a lack of cargo handling facilities.
- The 767 has a cargo handling concept, unfortunately with the wrong container standard, LD2. The alternative is pallet based freight, which works well for the 767.
- The A330-200 has the best passenger and cargo transporting capability. This compensates for its higher Direct Operating Costs but the low fuel prices keeps the 767 in the hunt.
How good is a used 767-300ER? Part 3
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By Bjorn Fehrm
Introduction
Jan. 4 2016, ©. Leeham Co: Before Christmas we started our Boeing 767-300ER article series around acquiring used twin-aisle 767 aircraft to upgrade Boeing 757-based long haul services. We compared the aircraft’s base characteristics in Part One and then their Cash Operating Cost (COC) in Part Two.
Now we continue by analyzing the Direct Operating Cost (DOC) of the aircraft. This adds capital costs to the other operating costs for the aircraft. As the reason for our renewed interest in the 767-300ER is the attractive prices on the used market combined with low fuel prices, the capital costs are an important part of the overall understanding of the costs for the aircraft.
In our assumptions, the 767 is bought as a 10 year old aircraft and then refurbished. It is then operated on a six year financial lease, as is our 757 that we replace. Our benchmark aircraft, the Airbus A330-200 flying in a mainline airline, was bought new in 2009 and is operated on a 10 year financial lease.
Summary
- The low capital costs of the 767-300ER makes it cost competitive in the fuel scenarios that are likely within its six year lease period.
- The 757-200W has fractionally lower direct seat mile costs than the 767, but it has lower capacity and its more limited range reduce its operational usefulness.
- The A330-200 has the best operational flexibility but its higher capital costs makes it the most expensive aircraft to operate in the period of interest.
- In a final article, we will add the revenue capability of the aircraft. This is where the A330-200 gets the chance to show if it can cover its higher direct costs with its higher earnings capability, thereby generating more value for the airline.