Here’s what to look for in 2014 in commercial aviation.
Airbus
A350 XWB: The high-profile A350 XWB program continues flight testing this year. Entry-into-service has been a sliding target. The program is running about 18 months behind original plan and EIS was intended for mid-year following initial delays. Even this has slipped, first to September and then to “the fourth quarter.” Currently first delivery is scheduled in October to launch customer Qatar Airways, which is slated to get four A350-900s this year. Emirates Airlines is listed as getting two of the total of six scheduled for delivery.
A320neo: Lost in the shadow of the A350 program is the A320neo. Final assembly of the first aircraft is to begin in the spring and first flight, followed by testing, is scheduled for this fall. The Pratt & Whitney Geared Turbo Fan is the initial variant. First delivery is scheduled in the fall of 2015.
Others: Airbus continues to evaluate whether to proceed with developing an A330neo. Based on our Market Intelligence, we expect a decision to proceed will come this year. Concurrently with this, we expect most if not all of the remaining 61 orders for the A350-800 to be upgraded to the A350-900 and the -800 program to be officially rescheduled if not dropped. The -800 is currently supposed to enter service in 2016, followed by the A350-1000 in 2017. But recall that as delays mounted on the A350-900, Airbus shifted engineers to the -900 and the -1000 at the expense of the -800. Salesmen have consistently shifted orders from the -800 to the larger models. We long ago anticipated the -800’s EIS would be rescheduled to 2018, following the -1000. The -800’s economics aren’t compelling enough just justify the expensive list price. So we expect Airbus to upgrade the A330 to a new engine option, using either or both of the Trent 1000 TEN and GEnx with PIPs (Performance Improvement Packages) or with some modifications. EIS would be about 2018. This precludes Pratt & Whitney from offering a large version of the Geared Turbo Fan, which wouldn’t be ready by then.
We also expect Airbus and the engine makers to look at re-engining the A380, driven by desires of Emirates Airlines to see a 10% economic improvement. Emirates announced an order for 50 A380s at the Dubai Air Show but instead of ordering the incumbent engine from Engine Alliance for these, Emirates left the engine choice open. This leaves open the possibility the A330neo and the “A380RE” could share an engine choice.
Boeing
After many years of turmoil, 2014 should be quiet for Boeing (now that the IAM issues have been resolved—see below).
787: Barring any untoward and unexpected issues, Boeing seems at long last to be on an upward trajectory with this program—but we’ve said this before. There are still nagging dispatch and fleet reliability issues on the 787-8 fleet to resolve, but flight testing of the 787-9 appears to be going well. Certification and first delivery should come without trouble this year, to launch customer Air New Zealand.
737: Nothing to report on the Next Generation program except ramp-up to a production rate of 42/mo is to take effect this year. Development continues on the 737 MAX.
Others: The 777 Classic is humming along. Now that the 777X is launched, we’ll be closely watching sales for the Classic; Boeing has a three year backlog but six years to 777X’s EIS. How is Boeing going to fill this gap, and what kind of price cuts will be offered to do so?
The 747-8 continues to struggle, barely holding on. Boeing says it thinks the cargo market will recover this year, boosting sales of the 747-8F. We’re dubious.
The 767 commercial program continues to wind down. The 767-based KC-46A program ramps up.
Posted on January 12, 2014 by Scott Hamilton
air force tanker, Airbus, Boeing, Bombardier, Comac, CSeries, Embraer, GE Aviation, Irkut, Mitsubishi, Pratt & Whitney, Rolls-Royce, Sukhoi, YAK
737 MAX, 747-8, 757, 767, 777 Classic, 777X, 787, A320NEO, A330, A330neo, A350, A380, A380RE, Airbus, ARJ21, Boeing, Bombardier, C919, CSeries, E-Jet, E-Jet E1, EJet E2, Embraer, GE Aviation, GEnx, Irkut, KC-46A, MC-21, Mitsubishi, Mitsubishi MRJ, Q400, Rolls-Royce, SSJ100, Sukhoi, Superjet, Trent 1000-TEN, YAK, Yak-242
Note: The following was distributed to our e-mail list December 23. Last week, American Airlines (as predicted) swapped the A350-800s for A350-900s.
The possibility of Airbus launching an A330 new engine option appears to be gaining ground.
Our Market Intelligence tells us that Airbus is considering a decision soon, probably next year, with a target entry-into-service date of 2018.
A decision to proceed with an A330neo would come after one to drop the A350-800, according to our information. Airbus has systematically switched -800 customers to the larger, and more profitable A350-900 and A350-1000. There are now just 79 A350-800s in backlog.
Customer |
Qty |
Comments |
Aeroflot |
8 |
|
Aircraft Purchase Fleet |
12 |
For Alitalia |
Asiana |
8 |
|
AWAS |
2 |
Probably will swap to A359 |
Hawaiian Airlines |
6 |
Waiting on US Airways |
ILFC |
6 |
Probably will swap to A359 |
Kingfisher |
5 |
Good as gone |
Libyan |
4 |
|
US Airways |
18 |
Expected to disappear now that AA merger completed, replaced with A359/A351 |
Yemenia |
10 |
|
Source: Airbus, Nov. 2013 |
79 |
Leeham Co Chart |
We identify 37, or 47%, that probably are already at risk of cancellation in favor of the larger A350-900 or A350-1000. These 37 are highlighted in red and pink. Another 10, those for Yemenia, are probably already iffy, according to Market Intelligence. The total of 47 represents 59% of the backlog. We have no information on the remaining customers’ intentions.
Posted on December 29, 2013 by Scott Hamilton
This week we take a look at the Boeing 777 Classic primary and secondary markets as a follow-on to our report last week in advance of the A340 Summit hosted by Airbus, Rolls-Royce and CFM International with additional presentations by Lufthansa Airlines and HiFly. We have a follow-up of this meeting on Leeham News and Comment.
The 777 Classic presents a very different picture compared with the A340. As a reminder, here is the current status of the A340 program, which is now out of production:
Status |
A340-200 |
A340-300 |
A340-500 |
A340-600 |
In Service |
19 |
175 |
20 |
90 |
Stored |
6 |
27 |
14 |
7 |
Source: Ascend Leeham Co Chart
On the other hand, Boeing has delivered 1,156 777 Classics and has a current backlog of 318. There are 259 orders and commitments for the 777X, officially launched last month at the Dubai Air Show, for a total of 1,415.
The Ascend data base, which tallies Letters of Intent, Options and Option LOIs, (and calculates orders and commitments somewhat differently than Boeing), has 2,059 units listed.
|
777-200 (All) |
777-300 (All) |
777 Classic TBD |
777-8 |
777-9 |
777X TBD |
In Service |
637 |
504 |
|
|
|
|
Orders |
43 |
272 |
|
8 |
45 |
|
Options |
35 |
68 |
1 |
|
|
62 |
Option LOIs |
20 |
5 |
15 |
|
|
|
LOIs |
42 |
75 |
6 |
35 |
179 |
|
Stored |
6 |
1 |
|
|
|
|
Total |
783 |
925 |
22 |
43 |
224 |
62 |
Source: Ascend |
|
|
|
|
Leeham Co. Chart |
The 777 program has been more successful than Boeing’s wildest dreams, and the 777X is off to a promising start.
While Airbus faces challenges with the A340 family on the secondary market, Boeing doesn’t have any similar issues today. There are just seven Classics stored, according to Ascend: six 200s and one 300, compared with 54 A340s of all sub-types, or 15% of the total fleet compared with 0.6% for the 777 Classics.
Most of the Classics remain with the original operators. Only a few -200ERs and five -200LRs have traded, the latter a special case because the original operator, Air India, was in financial distress and elected to dispose of the airplanes at a distressed price to raise cash.
What is the secondary market potential for the Classics? Market Intelligence suggest very little-to-no market for the 86 777-200 “standards,” the light-weight, 545,000 lb, 5,240nm initial version of the Classic family. The heavier weight 777-200ER at 656,000 lbs and 7,725nm range is a secondary passenger market and a freighter conversion candidate. Boeing has been studying a P2F conversion for the 200ER, but this potentially is a costly option, according to the Market.
The -200ER was optimized for passenger service and includes composite floor beams that will have to be replaced with steel beams, according to a 2012 Boeing briefing. Major structures and component work will be required. Then, Boeing assumed early -200ERs would be priced in the high $20m range, and the conversion would cost in the low $30m, for an out-the-door price of the low $60m.
Kostya Zolotusky, managing director for Capital Market Leasing at Boeing Capital Corp., tells us that nothing has changed in P2F timing. Feedstock values, however, are too high and a weak cargo market means there are plenty of Boeing 747-400s and MD-11s surplus today. Boeing does not expect the freighter market being strong at least for a couple years.
He believes there is a potential market for the 777-200 standard for package carriers outside the mature USA market. A 777-200ER P2F would be a different airplane vs the new-build 777-200LRF: an 80 tonne airplane vs 100T.
Zolotusky notes that the 777 “has one of the lowest movements out of the original operators out of all the wide-bodies. There is nothing that is parked or in distress.” All 777s are within 90 percentile of original operator, he tells us and compared the Airbus A330s in 80s and the A340s in 70s.
One of the issues with the A340s are the Power By Hour arrangements with Rolls-Royce for the A340-500/600 engines. “We are talking to engine makers to be sure we don’t have A340 situation that limits the liquidity with PBH situation,” Zolotusky tells us.
While this is a follow-on to the A340 report of last week, Zolotusky urged that we “decouple the conversation from A340. The A340 became economically unviable.”
Posted on December 15, 2013 by Scott Hamilton
Airbus held a summit December 4 for stakeholders in the A340 to explain how there continues to be life after production ended and despite being a four-engined airplane in a two-engine world.
Key to the future of this out-of-production airliner is increasing the capacity of the A340-600 to an exit-limited 475 seats and for Rolls-Royce to alter its Total Care engine maintenance Power-by-the-Hour terms and conditions to reduce costs.
Airlines, financiers, appraisers and the engine makers were invited by John Leahy, chief operating officer-Customers of Airbus. Engine providers CFM International, Rolls-Royce, Lufthansa Airlines and Hi Fly, a small European airline, made presentations in addition to Airbus.
Airbus produced 246 A340-200/300s and 131 A340-500/600s; 227 and 131 respectively are in operation or parked.
Status |
A340-200 |
A340-300 |
A340-500 |
A340-600 |
In Service |
19 |
175 |
20 |
90 |
Stored |
6 |
27 |
14 |
7 |
Airbus guaranteed the residual value on an unknown number, and has strong motivation to see these airplanes continue in service, according to one person familiar with the situation.
Posted on December 8, 2013 by Scott Hamilton
AirAsia on Airbus: AirAsia Group is one of Airbus’ largest customers, and its CEO Tony Fernandes is increasingly influential in the Asian sector. He’s also into car racing, often betting Virgin Group’s Richard Branson. This short interview details Fernandes’ view on the prospective A330neo–something Fernandes has been pushing for some time–and what he thinks Airbus should do with the A380.
Looking at the 777X: Aviation Week has a detailed look at the Boeing 777X “under the skin.” Fuel burn, engine thrust and general specifications are in the article. Aviation Week also has a series of videos from the Dubai Air Show here. Topics: 777X, Qatar Airways and A380 engines. On the latter, Emirates CEO Tim Clark suggests putting the new GE9X or Rolls-Royce Trent on the A380 to reduce fuel burn by 10%.
Posted on November 26, 2013 by Scott Hamilton
Last week we discussed Airbus’ A350-1000 dilemma. The -1000 will be a fine airplane, but we concluded the company needs to go forward with a larger capacity “A350-1100” to match the size of the Boeing 777-9X, but take the Boeing 787-10 approach and be content with sacrificing range in lieu of designing a new wing and engines.
Airbus’ A350 dilemma doesn’t end there. What’s it to do with the A350-800? One fleet planner told us a year or more ago that the “-800 is an expensive A330-300” with the same operating costs as the larger capacity A350-900.
Airbus has been encouraging customers to move up to the larger A350-900, with Hawaiian Airlines and US Airways the key hold outs. Conventional wisdom says US Airways will swap its order once the merger with American Airlines goes through (which is looking more and more likely, given settlement talks with the Department of Justice). American has a large order for the Boeing 787-9, making the -800 unnecessary in a combined carrier fleet plan.
There are now around 80 -800s in Airbus’ backlog, and even officials at Airbus have been ambiguous about green-lighting production of the -800, which is supposed to enter service in 2016 (after the -900 but before the -1000). We have written several posts in which we concluded the -800 would be re-sequenced to 2018, after the 2017 EIS of the -1000.
We believe there is a very good chance the A350-800 will be dropped in favor of proceeding with an A350-1100.
So what’s Airbus to do in the 250-300 seat space now occupied by the -800 and the aging A330 family?
Posted on November 4, 2013 by Scott Hamilton
Airbus, Boeing, GE Aviation, Rolls-Royce
777, 777-300ER, 777-9, 787-10, 787-9, A330-200, A330-300, A350, A350-1000, A350-1100, A350-800, A350-900, Airbus, Boeing, GE Aviation, GEnx, Rolls-Royce, Trent 1000
Airbus has a dilemma with what to do about the A350-1000.
.
Does the OEM stick with the -1000 as it is, ceding the 400 seat segment to Boeing with its new 777-9X? Or does it stretch the -1000 (we’ll call it the “1100” for a placeholder) for what appears to be a very limited market segment?
.
If Airbus does stretch the -1000, what does this stretch look like? One that will match the 9X range and capacity? Or one that matches the capacity but not the range?
Here are the implications of the dilemma facing Airbus.
.
Stay the Course
For a long time, Airbus officials said they were satisfied with the design, once tweaked, of the -1000 and they didn’t need to respond to a “paper” airplane. The characterization had a ring to it, for that’s what Boeing officials often said about the -1000: it wasn’t a “real” airplane, they didn’t know what it was, it was a “paper” airplane or some variation thereto.
.
Of course, this was rhetoric by both parties. Lufthansa Airlines ordered 34 777-9s. A huge order+option commitment is anticipated at the Dubai Air Show from Emriates Airlines for the -9 and the smaller, ultra-long range (ULR) -8 that is sized directly across from the -1000. Airbus is now faced with the prospect of Boeing once more having a monopoly position with the 777-9 as it did for many years with the 777-300ER.
.
Does Airbus want to cede the 400-seat segment to a Boeing monopoly? The question is, how big is this segment? Is there a business case to build the airplane, or one that’s big enough for two airplanes?
.
Boeing’s current 20 year forecast indicated there is a need for 4,530 “small” twin aisle, 200-300 seat jets and 3,300 for “medium” twin aisle jets, 300-400 seats, for a total 7,830. Airbus forecasts a need for 4,694 250-300 seat jets and 2,085 350-400 seaters, for 6,779 jets, a difference of nearly 1,100-but, then, Airbus doesn’t have a competitor to the 787-8 at the lower end of the small jet sector.
.
Airbus further breaks out its forecast: 2,438 250-seat and 2,256 300-seat jets within the “small” twin; and 1,306 350-seat and 779 400-seat jets within the “medium” twin category. Boeing doesn’t subdivide its forecast.
.
The 777-9 will kill the near-dormant 747-8 Intercontinental and will likely eat into sales of the Airbus A380. Does Airbus avoid cannibalizing its own product or does it allow Boeing the monopoly to do so?
Source: Great Circle Mapper
Match the 777-9
Airbus could decide that, despite a its own narrow forecast for a 400 seat segment, it would be better to play in this sandbox, whatever the impact on the A380, than to cede this segment to Boeing. The question then arises, does an A350-1100 match the 777-9 in seats (or come close to it) and range, around 8,100nm-8,400nm?
To match means a major undertaking for a small number of airlines that need a plane with this range. It means a new wing–typically a $3bn project, more or less–and new engines in the 104,000-105,000 lb thrust range. The Rolls-Royce Trent XWB on the A350-1000 is 97,000 lbs and it can’t be pushed any farther, our information tells us. The cost of developing an entirely new engine for such a narrow market doesn’t have a business case. One might exist on the presumption that engines have to get bigger, and a new engine design would provide the basis for an entirely new generation of engines. After all, the Trent fundamentally has been around since the A330. It may well be time, but is an A350-1100 the product from which to develop it? Furthermore, it takes at least seven years to develop a new engine and probably a lot longer. The engine is the pacing item, far more than the airframe. Even if the go-ahead were given this minute, Airbus and RR would be hard-pressed to come up with an A350-1100 by 2020, when the 777-9 EIS is anticipated. So…
The 787-10 Approach
The most viable option for stretching the A350-1000 appears to be following the approach Boeing took with the 787-10: a couple of simple fuselage plugs, some enhancements to the existing engines, the same wing and reduced range that covers 90% of the markets required by the airlines–foregoing the miniscule need by Emirates Airlines for that last 5%-10%.
Source: Great Circle Mapper
An A350-1100 with reduced range of 7,000nm-7,500nm and a 400 seat capacity would have highly favorable cost per available seat miles. It wouldn’t get you from Paris to Tahiti, but how big is this market? It wouldn’t get you from Dubai to Los Angeles, but are billions of dollars worth of R&D to do so going to get the return on investment to make sense for this airplane?
The clear choice, the financially responsible choice, and the expeditious choice appears to follow the Boeing approach and develop an A350-1100 (or, perhaps, the “A350-1000-10”).
Posted on October 31, 2013 by Scott Hamilton
Ethiopian 787: Dominic Gates at The Seattle Times has a detailed story about how Boeing is repairing the Ethiopian Airlines 787 damaged by a fire at London Heathrow Airport earlier this year. Boeing doesn’t comment for the story–nor for any others–but Gates’ detail in his piece makes for quite interesting reading.
Stretching the A350-1000: More on this topic from Aviation Week. Aside from the technical considerations for the airframe, Rolls-Royce would need to bump up the thrust of the engine to around 104,000 lbs, we’re told. Also: there is the matter of production. Airbus is considering a second production line for the A350, but no decision has been made.
Rolls-Royce studies new engines: Rolls-Royce is studying a new line of engines, according to this Bloomberg article.
Posted on October 22, 2013 by Scott Hamilton
Rolls-Royce, Airbus Milestone: Aviation Week reports that the two companies reached a design milestone for the engine on the A350-1000.
C919 nearing ‘critical’ stage: Flight Global reports that the COMAC C919, China’s bid to challenge Airbus and Boeing in the 150-210 seat sector, is nearing a critical design stage. COMAC also discusses some of the issues with its ARJ21 in the article.
First Flight Videos: No introductions needed.
[youtube=http://www.youtube.com/watch?v=eWtPA8v-xeQ&w=560&h=315]
[youtube=http://www.youtube.com/watch?v=y5SBzdG3upw&w=420&h=315]
[youtube=http://www.youtube.com/watch?v=r4HZRvwkiwk&w=420&h=315]
Posted on September 26, 2013 by Scott Hamilton
Airbus forecast: Airbus announced its 20 year forecast update today in London (Boeing’s update came in advance of the Paris Air Show in July). Here are links to the update:
Airbus summary and news release
Global Market Forecast video and document.
Overall demand increased, according to the forecast. The demand for the Very Large Aircraft sector remains flat at 1,300, a figure which generally has varied very little since Airbus first began forecasting this sector. Boeing’s forecast is sharply lower. We basically agree with Boeing’s number but believe Airbus will have the lion’s share of this sector.
Boeing does not categorize its 406-seat 777-9X as a VLA even though at this capacity it falls within the sector’s long-standing definition of >400 seats.
Boeing in Washington State: KUOW, one of the public radio stations here in the Seattle area, has an, in-depth report on Boeing in Washington State and the challenges the state has in keeping Boeing here. The text is here, along with the broadcast.
Michel Merluzeau, of Kirkland (WA’s) G2 Solutions consultcy, says the center of aerospace has shifted to the US Southeast from Washington State. We’re not sure the “center” has shifted, yet, but it’s certainly tilting that direction.
Putting out a fire: With a hat-tip to JC Hall of Esterline for bringing this to our attention, this video clip needs no explanation.
[youtube=http://www.youtube.com/watch?v=tfdJeB9k5DY&w=560&h=315]
Rolls-Royce: Aviation Week has this story about the future of Rolls-Royce in commercial aviation now that its joint venture with Pratt & Whitney (International Aero Engines) is over.
Classic Airliners: Loads of photos here.
Posted on September 24, 2013 by Scott Hamilton