Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Does an A220-500 need a new wing and engines? Part 4. July 3, 2025
- GE testing of giant GE9X engine aims for maturity at entry into service June 30, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 28. June 27, 2025
- Parent agency, FAA often at odds as politics outweighs safety June 26, 2025
- Electric Flight and the Ugly Duckling June 25, 2025
Bjorn’s Corner: After weight or fuel limited we examine weight or volume limited
By Bjorn Fehrm
31 July 2015, ©. Leeham Co: Last week we explained what fuel limited meant and how that differs from an aircraft that has big enough fuel tanks so it can operate weight limited for its missions.
This was for fuel and it dictates to a large degree how the aircraft will behave on long range missions. When we block off seats to fly further, is it to allow more fuel in our tanks or is it to make the aircraft lighter to fly further with tanks already filled to the brim.
A similar phenomenon appears when we load the aircraft with its payload; an aircraft can take-off volume or weight limited. Here is how it works.
Rolls-Royce and Safran, major European engine OEMs with different fortunes.
By Bjorn Fehrm
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July 30, 2015 © Leeham Co. Rolls-Royce and Safran, the parent company of CFM partner Snecma, released their Q2 and first half 2015 earnings today. It is interesting to compare these companies as they are in different strategic situations in their dominant business segments, civil turbofan engines.
Civil turbofans constitute 52% of Rolls-Royce total business whereas it makes 54% of Safran’s turn over. Rolls-Royce’s focus has been widebody engines to the point where it exited its part of International Aero Engines, which makes the single aisle V2500 engine, three years ago. Safran on the other hand is heavily invested in the single aisle market through its 50% part in CFM through its Snecma subsidiary.
The present situation and the future outlook for these two companies are intimately aligned with this strategic difference. We look at why and how this will affect their immediate future.
Summary:
- Rolls-Royce is experiencing migration problems in its widebody turbofan business. Its bread and butter Trent 700 engine is on its way out and it takes until 2018 for the replacement, Trent 7000, to kick in.
- Other programs are only growing slowly: the Trent 1000 for Boeing’s 787 or Trent XWB for the Airbus A350.
- Safran civil turbofan business Snecma is enjoying record sales and deliveries through its CFM joint venture with GE.
- Despite sharing its revenue 50:50 with GE, the business turnover is the size of Rolls-Royce turbofan business today and larger tomorrow. Profit margins are three times higher.
Fancher takes on KC-46A; FAA investigating Allegiant Air
July 30, 2015: Scott Fancher, regarded as the person to come in and take over troubled programs at Boeing, has been named to take over the KC-46A program.
Scott Fancher. Source: Boeing.
Fancher originally came to Boeing Commercial Airplanes from the Boeing defense unit to take over the 787 program at a time when development and design issues were rampant and the plane had yet to be delivered to a single customer.
After that was straightened out, Fancher took over new airplane programs and then moved to oversee development of the 777X, which is Boeing’s response to the Airbus A350 XWB. Although the 777X is a derivative, Boeing’s 747-8 derivative was two years late (in no small part due to the knock-on effects of the 787 program problems). Fancher’s charge with 777X was to be sure it comes in on time and on budget.
Embraer delays KC-390 one year in 2Q2015 earnings announcement
July 30, 2015: Embraer reset entry into service for its KC-390 tanker/transport will be in 2018 vs 2017 when it reported its 2Q2015 earnings today.
The press release is here.
The KC-390 is Embraer’s largest aircraft, with a fuselage the size of a Boeing 767 width and the length of a Boeing 737. The airplane is being developed with government backing, intended to serve the remote regions of Brazil. Embraer also plans to market the airplane for export. Government funding has been squeezed with Brazil’s latest economic decline. Embraer has $390m in accounts receivable from the government.
The financial numbers were somewhat mixed, with a decline in revenue forecast for its defense unit, lower EBIT margins but solid commercial aircraft backlogs.
Embraer’s revised guidance is here. EMB’s 2Q2015 earnings presentation is here: EMBRAER_2Q15_Results
Goldman Sachs has this initial reaction:
Bombardier reports lower 2Q2015 income
July 30, 2015: Bombardier reported lower net income on slightly higher revenues for the second quarter.
The press release is here. The earnings call presentation is here. Bombardier-Q2-2015-Presentation-20150730-en
“Overall, the second quarter was in line with plan in terms of revenues, EBIT and deliveries, and our liquidity stands at $4.4 billion,” said Alain Bellemare, President 
and Chief Executive Officer. “After five months on the job, I have a better understanding of our challenges and opportunities. We are taking specific action, including the launch of our Bombardier transformation plan, a disciplined approach to cash management, and the strengthening of our leadership team to reshape the company and ensure our long-term success.”
Bombardier said it completed 2,000 of the 2,400 hours required for certification of the C Series, which will be delivered during the first half of 2016 to launch operator Swiss International.
During the earnings call, Bellemare outlined more details of the Transformation Plan designed to turn BBD around from its financial strains.
MH370: Caution, no quick resolution
July 29, 2015: By now the world knows a piece of an airplane wing consistent with a Boeing 777 has been found on an island near Africa, thousands of miles from the search areas of the West Coast of Australia.
As this is written, while news reports indicate Boeing says that from photos the part appears consistent with a 777 wing part (and, of course, Malaysia Airlines flight MH370 is the only missing 777), confirmation hasn’t been achieved.
Even if this part proves to be from the missing 777, don’t expect any resolution soon.
Computers may be able to calculate ocean currents, time and distances to trace back a reasonable point of origin–if possible, this will take time–and then deep sea searching must start all over again.
Caution should be exercised over this discovery. No quick resolution is going to be forthcoming if this part is from the missing airliner.
This mystery is far from over.
Spirit Aerosystems: Higher profits on lower revenue
July 29, 2015: Spirit Aerosystems, whose principal business is a major OEM supplier to Boeing but which also makes fuselage panels for the Airbus A350, reported 
lower revenues but higher profits for the FY2Q2015.
The press release is here.
Revenues were down because the company sold its Gulfstream wing sector and lower revenues were recognized from the Boeing 787 program.
“Preparing for aircraft rate increases is a key focus for us this year. Near term, we are capitalizing to increase the production rate of the 787 to 12 shipsets per month and the 737 to 47 shipsets per month, as well as the higher production rates on the A320 and A350 programs,” said Larry Lawson, CEO.
Wells Fargo has this initial reaction:
Triumph Group disappoints, cites decreased aircraft production
July 29, 2015: Triumph Group reported lower FY1Q2016 earnings below analyst expectations, citing in part decreased production of the commercial Airbus A330
program as well as lower production of the Gulfstream G450/550 and Boeing C-17 and 747-8 airplanes. It’s previously taken large write-offs of the Boeing 747-8 program on its poor sales.
Triumph said in its press release:
The Aerostructures segment reported net sales of $611.8 million in the first quarter of fiscal year 2016 compared to $612.2 million in the prior fiscal year period. Organic sales for the quarter declined fourteen percent primarily due to decreased production on the C-17, 747-8, A330 and G450/G550 programs. Operating income for the first quarter of fiscal year 2016 was $66.0 million, compared to operating income of $68.8 million for the prior year period and included $1.9 million of pre-tax costs related to initial facility consolidation actions. The segment’s operating results for the quarter included a net favorable cumulative catch-up adjustment on long-term contracts of $1.3 million. The segment’s operating margin for the quarter was eleven percent. Excluding the 747-8 program, the segment’s operating margin for the quarter was thirteen percent.
Triumph’s Top 10 programs are mostly Airbus and Boeing commercial airplanes. Boeing makes up more than 10% of Triumph’s 1Q revenue. The earnings call presentation is here. Slide 15 outlines the Top 10 programs.
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Introduction
July 28, 2015: © Leeham Co. Trying to decipher what the airframe Original Equipment Manufacturers (OEMs) are going to do is a sporty game that is often analogous to Kremlin watching, especially when it comes to Airbus and Boeing.
The OEMs are naturally circumspect about most everything they do: product development, aircraft pricing, sales campaigns, etc.
They also often are like lawyers when it comes to promoting their products in the public domain: cherry-pick the data that supports your product and which puts your competitor’s product in the worst possible light.
Aerospace analysts, consultants and media (as well as the enthusiast) look anywhere and everywhere for information to discern what the OEMs are up to or how the airplanes are performing or whatever the soup de jour is.
There is more information in the public domain than you would think.
Rockwell Collins sector sales below expectations because Boeing 787 doing so well
June 28, 2015: Rockwell Collins, a major supplier of aircraft systems, said in its FY3Q2015 earnings call Friday that aftermarket parts and provisioning sales were
Fewer airlines introduced the 787 into service in the third quarter, also driving down provisioning, Rockwell said.
Although Rockwell’s emphasis was on its own products, the news from a third party such as Rockwell must be sweet music to Boeing’s ears after all the program difficulties and a three-and-a-half month grounding of the 50 787s then in service beginning in January 2013 after two battery fire and smoke incidents. It is, after all, Boeing’s name on the side of the airplane, not Rockwell’s. There are now about 300 787s in service.