Leeham News and Analysis
There's more to real news than a news release.
PNAA conference: Embraer Enhanced E-Jet improves fuel burn by 5%; talks of re-engine
The E175 Enhanced (a step below the full re-engine) will improve fuel burn by 5%, says Tobias Caldas of Embraer at the Pacific Northwest Aerospace Alliance. This includes a redesign winglet and other fuselage/engine PIPs.
Enhancements include new avionics, interior improvements, maintenance cost reductions and noise reductions. Aerodynamic improvements will be forthcoming on the E-190/195. The E1`70 will have a 5% improvement, the E175 will have 5.5%, the E190 3.5% and the E195 4%.
Republic Airways is the launch customer for E-Jet “E” and will operate the plane for American Airlines’ Eagle unit. The order brings the current backlog for the E-Jet to about 150. (Aerospace analysts have been concerned for some time about the shrinking backlog, with production rates exceeding a 1:1 book-to-bill.)
Embraer continues to promote the E_Jet as a right-sizing mainline aircraft in the 90-125 seat segment, with 3,765 forecast as a requirement in the next 20 years in this segment.
The re-engined E-Jet includes a new wing and the Pratt & Whitney GTF engines. EMB is calling the revised airplane the E-Jet Second Generation (E-Jet SG). EMB to formally launch the program this year, with EIS in 2018. The models and size are being defined (though our market sourcing says there will be an eight passenger stretch). EMB says there will be “double digit” fuel burn improvment.
Odds and Ends: 787-10/777X; 737NG engine issues; American-US Airways
787-10/777X: Aspire Aviation has this long analysis of the current status of these developmental programs.
737NG Engine Issues: Aviation Week on February 8 had a report of thrust irregularities on the Boeing 737NG. The Seattle Times reported it on line last night and in print today. And then the Seattle media went mad. We’re perplexed. The issue goes back five years, it happened 32 times and not since December when a fix appears to have–fixed it. What’s the big deal?
American-US Airways: The long-awaited merger was announced today and to our great relief, the US Airways management will run the place. American CEO Tom Horton is booted upstairs to non-executive chairman, much as was Glenn Tilton in the United-Continental combination. Unfortunately the AA-US merger keeps the awful tail livery rolled out by Horton a few weeks ago.
Allegiant Air sees starting commercial service at Paine Field by the fall
Allegiant Air, a discount carrier that serves Bellingham and other cities in Washington, and which started the studies for commercial aviation service for Paine Field in Everett (WA), said it sees starting air service at Paine Field this fall. “We’re in negotiations now. The first opportunity is in the fall,” says Jude Bricker, VP of Allegiant, who made the announcement at the PNAA conference.
Other stuff:
- Allegiant serves a half dozen cities from Bellingham, including Phoenix, Las Vegas and two cities in Hawaii with 15 flights a week.
- I am as bullish today about the business as ever. Will see real rationalization come to the space. Capacity will be rationalized. There is more ability to pass on higher costs.
- Allegiant serves about 200 markets. Scheduling is done for price. Thursday into Vegas, Sunday out. We don’t fly anything on Tuesday.
- We unbundle product because people who fly Allegiant are extremely elastic as to fares.
- $1.5bn market cap at $78 stock price.
- We schedule by week, by market. We always ask ourselves, what is the least crappy thing we can do with this airplane?
- Roughly we don’t make any money on air fares. We would lose money selling only fares. Ancillary revenue is the profit base.
PNAA Endorses Commercial Air Service at Paine Field
The Pacific Northwest Aerospace Alliance today endorsed commercial air service at Paine Field in Everett (WA). The move is highly controversial. The Snohomish County Council and the City Councils of Edmonds and Mukilteo, adjacent suburbs, oppose the service.
PNAA made the announcement at its conference in the Seattle suburb of Lynnwood, a few miles from Paine Field.
Allegiant Air, which also spoke at the conference, first proposed commercial service at Paine a few years ago. Alaska Air Group, based in Seattle and the largest carrier at SEA-TAC Airport, opposes service at Paine but has filed the paperwork with the FAA to commence service if Allegiant does. Alaska Airlines and sister company Horizon Air would provide some 50 flights a week to a half-dozen destinations. Allegiant proposes four or five flights a week to two or three cities.
PNAA, a trade group that represents more than 100 companies with nearly 100,000 employees, said commercial service will benefit the supply chain, employees and residents who live north of Seattle who currently have to rely on the congested I-5 and I-405 corridors to go to and from SEA-TAC. The Seattle area is considered one of the Top 10 most traffic congested cities in the country.
Paine Field has about 400 flights a day, only one-third of the airport capacity. Boeing’s wide-body production is at the airport and accounts for only about 5% of the operations. The balance is private aviation and MRO traffic.
PNAA Conference Pt 3: Renewable biofuels
The future of bio-fuel is different from the bio-fuel today, says John Plaza, CEO of Imperium Renewables. He is speaking at the Pacific Northwest Aerospace Alliance conference in suburban Seattle. It will be drop-in fuel, potential to be cheaper, meet same specifications as petroleum, equivalent to civilian (JP-8) and military fleets (JP-10).
First generation of bio-fuel is bio-diesel. Second generation will be the drop-in described above. Bio-fuels have to become multiple products as in the petroleum industry.
- We’re seeing increasing density of bio-fuels, which increases BTUs and efficiency on long-haul flights.
- WA State has one of highest recycling programs in the country but still generates a lot of trash (much of which is trained to Oregon). Trash can contribute to bio-fuel.
- Bio-fuel without subsidy costs around $4/gal vs $3.25 or so for jet fuel, so there is still a price disparity.
- 200 million gallons of jet fuel within 100 mile radius of wood slash can be generated.
- Other feed stocks: Jatropha, Eucalyptus, mixed growth plots. Algae is interesting but requires more research.
PNAA Conference, Pt 2: Odds end Ends–Executive Director named; now largest conference in sector on West Coast
PNAA Executive Director: The Pacific Northwest Aerospace Alliance named its first Executive Director, Melanie Jordan. Jordan has been very active in Puget Sound aerospace matters for years and has been on the board of the Future of Flight Museum and the Historic Flight Foundation, both at Paine Field in Everett.
PNAA Growth: PNAA is 15 years old and has been holding its conference for 12 years. This year 400 are attending, a record. This has now become the largest conference of its kind on the West Coast. This is a mix of airlines, OEMs, suppliers, training institutions.
Aircraft interiors: Complexities of interiors are greater than seems obvious. Cockpit doors are example of conflicts: you want authorized and emergency access, but doors have to be able to withstand unauthorized access. Diaper changing tables need to weight no more than 2 pounds but be capable of withstanding 1,200 lbs of pressure and still be 3/4 in thick and three feet long. A light-weight door can be designed but the cost goes beyond the 12 month return on investment, so not favored despite long-term fuel savings. Airline Marketing wants a certain look and battles finance. Engineering has another opinion. Market conditions might suddenly change and make them rethink everything. Lower lobe crew rest takes away cargo space, impacting cargo revenue–but this can be offset by more passengers.
PNAA conference, Pt 1: Traffic data; AA-US merger thoughts, 787
Each airline region of the world is different and many going through transitions US went through previously, says Bob McAdoo, the airline analyst for Imperial Capital (a boutique investment banking company in California).
McAdoo is speaking at the Pacific Northwest Aerospace Alliance conference in suburban Seattle today. Highlights:
- IATA traffic data doesn’t make a lot of sense any more. I can always get traffic–all I have to do is charge $19. Without knowing the data behind the numbers, traffic data is meaningless. People say US isn’t a growth market, but it’s making money.
- American Airlines-US Airways: Turn back clock to 2005/6: America West took over US Airways and in less than a year had best profit margins in the industry. Boeing is on AA creditors committee and I think there will be MD-80s coming out sooner and these guys (Doug Parker) will run it like a business. These guys will look at a route structure and say what works and won’t work, not a route planning department that likes the look on a map. I think you will see a lot of markets shut down.
- These guys have been in the top one or two in profit margin. US carries more people out of Philly than AA does out of New to Europe.
- This is a non-growth world in many respects.
- McAdoo recalls when he was at Texas International and his job was to put Southwest out of business. “I wasn’t very good at that.”
- Allegiant and Spirit are, in effect, next Southwest. Tells a story of a friend who rode Spirit once and will never ride them again, “but I’ll buy their stock.”
- 737-400 rent $65,000, 737NG (older) $135,000.
Odds and Ends: ICAO says no to lithium batteries;Dendrites and the 787; Deleting Flightblogger
ICAO says no to lithium-ion batteries: The UN organization ICAO apparently will reverse itself and say that lithium-ion batteries should not be shipped as cargo on passenger airliners. This seems like a prudent move, considering the history of fires involving this battery type, even before the Boeing 787 incidents.
Dendrites and the 787: It sounds like something out of your biology class. Microscopic things called Dendrites might be the root cause of the lithium-ion battery fires on the 787, according to the first reporting from The Wall Street Journal. (Subscription required. Here is a Reuters story on the same topic.)
Deleting Flightblogger: Alas, we deleted Flightblogger from our bookmarks. Jon Ostrower created this blog and built it into a major aviation resource. When he departed Flight International for The Wall Street Journal, Flight half-heartedly (if that) continued the column, but there hasn’t been an entry since August.
Rolls-Royce Certifies Trent XWB: Rolls-Royce received certification for the Trent XWB, which will be used for the Airbus A350.
Airbus still ponders battery future: Airbus is still considering what to do about the plans to use the lithium-ion battery in the A350. A Seattle TV station reported Airbus made the decision to drop these batteries in favor of older, proven technology. Airbus told us this isn’t so (yet). Says a spokesman:
We are following the 787 investigation closely and will evaluate whether any recommendation applies to us.
We have a robust design. If this design has to evolve, we have the time to do that before first delivery.
Nothing prevents us from going back to a classical plan that we have been studying in parallel.
We have all options open, which we keep evaluating in pace with the ongoing investigation.
Odds and Ends: Returning the 787 to service; Elon Musk’s Tesla challenges; Droning on
Consensus Building around 787 Fix: There seems to be a consensus building in industry around the timing of the battery fix for the Boeing 787. Customers and suppliers we talk to believe Boeing will have an interim fix developed this month and the aircraft should return to revenue service next month.
Of course, the only consensus that counts is the FAA, EASA and the other regulatory agencies. We’ll see if this develops as others hope.
And Elon Musk wants to lecture Boeing on Lithium Ion batteries: see this story; he’s got problems of his own.
Droning On: The Seattle Mayor has banned his police department from using drones. The SPD is one of the first in the US to use drones for short-term surveillance. The small UAVs have battery endurance for perhaps half an hour (queue the lithium battery jokes). These have been used to look for criminals and traffic accident investigation.
But civil libertarians and those concerned with SPD’s potential for abuse (and not without good reason, given SPD’s track record) created a stink that prompted Mayor Mike McGinn to ban the use.
McGinn is up for reelection and has proved to be a lefty-wacko who is very vulnerable. We think his decision is in character and an effort to appease his shrinking voter base.
Drones for law enforcement are a useful, an inexpensive tool. Civil libertarians are concerned that surveillance will be too wide-spread and invade privacy. We’re confused. Most big city police agencies have helicopters. Highway patrols have airplanes. Each of these can see what drones can see, and civil libertarians haven’t complained about these, at least that we have seen. We see little difference in between drones and these older technologies. See what we’re talking about?
According to news reports, a drone was used to keep an eye on the recent hostage-taking standoff in Alabama.
We have no problem with law enforcement using drones. (Nor do we have a problem with Obama using them, either, but this is a topic for another post.)