Tag Archives: COMAC

Here’s a thought…

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As the world gets ready for the Paris air show, take a look at this photograph apparently taken of a model plane on the Ryanair Chief Pilot’s desk.  In case you don’t recognize this, its a C919. 

Of course everyone in this industry collects models, and we all know that COMAC is pushing the idea of a C919 as hard as it can.  And Ryanair is looking for something new and of course, cheaper than the 737. Moreover, we do not imagine the Chief Pilot will be thrilled to hear of this snap taken of his desk. (The model has probably been hidden now).  In a less cropped version of this image, we see no other models on the desk.

So this could be nothing or it might be something amusing.

Bombardier’s Risk Mitigation on CSeries Supply Chain

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If there is one thing the aerospace industry has learned over the past few years it is the scary things that come with outsourcing. On the one hand, everyone wants to save money and drive costs lower. But as we have seen, in the short term trying to save money can be like fool’s gold. This is a very expensive and complex industry. For a company like Bombardier, it took the first steps to global outsourcing twenty years ago. Continue reading →

The unpredictable Al-Baker

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What is Qatar’s CEO, Akbar Al-Baker, up to?

The unpredictable Al-Baker, who has achieved the nickname U-Turn Al for his ability to pivot 180 degrees at a moment’s notice, seems to like the limelight in the press with his bombastic behavior.

In his latest interview, he takes on Boeing and Bombardier.

His frustration with Boeing is understandable. With a major order for the 787, Qatar is adversely affected by the repeated delays in the program and the continuing uncertainty over the delivery schedule.

His public criticism of Bombardier and Pratt & Whitney is mysterious–and may fall into the category of public posturing.

But first, how did Al-Baker earn the nickname U-Turn Al?

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Disappointing, over-hyped performance for C919

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The Chinese wanted to showcase their emerging aerospace industry at the Zhuhai Air Show this week and leaked that “hundreds” of orders would be forthcoming for the COMAC C919.

Reality fell far short.

On the first day of the show, the Chinese announced 100 “orders” for the airplane, which challenges the Boeing 737-800/900 and the Airbus A320/321. So far, on target. Six customers signed: the Big Three (Air China, China Eastern and China Southern) signed, as expected; Hainan did, too, a surprise, as did China Development Bank (not previously suspected) and GECAS (not previously suspected but no particular surprise, either, given GECAS’ prior order for 5+20 COMAC/AVIC ARJ21 regional jets).

But Aviation Week took a look under the hood, so-to-speak, and discovered the 100 orders were really just a dismal 55 from the six customers.

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Was McNerney Unduly Pessimistic at Wings Club?

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Jim McNerney, Chairman and CEO of Boeing, issued a downbeat assessment of the US Aerospace industry at the Wings Club in New York November 11 when he expressed concern that the US industry may atrophy due to a shrinking labor talent pool.. In doing so, he cited the failure of the Boeing business model that delegated too much work to partners in an effort to share the costs and risks of the large scale development program for the 787. He is now concerned about competition from China, Russia and Japan.

The irony about the emerging competitors is notable because Boeing has long relied upon these three countries for outsourcing and stepped up the work in Japan and Russia for the troubled 787 and 747-8 programs. In essence, Boeing has had a major hand in creating its own competitors. (Airbus, Bombardier and Embraer also are guilty as well.)

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Airbus NEO Decision will be Based on Strategic Partners and Euro Politics

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Airbus decision on the NEO has been delayed as it attempts to obtain additional funding from the engine manufacturers, and the timing of the LEAP-X engine from CFM International, the full version of which may be delayed to 2018

Airbus, and John Leahy, have been touting the A320NEO re-engining program as an interim solution until a new aircraft can be developed in the 2025 time frame that takes advantage of new open rotor technologies. With either the PW GTF or CFM International LEAP-X engines, a 15% improvement in fuel burn could be expected, which should translate to operating cost savings of 6-8% prior to capital costs, fuel being just under half of operating costs.

Boeing has criticized the program, indicating that after capital costs, only an incremental gain of 3-5% would remain. Airlines however, for whom a 1% difference in costs can mean the difference between profit and loss, remain interested in an aircraft with 15% lower fuel burn.

Airbus has two critical issues holding up the decision to move forward with the NEO. The first is capital. Airbus delays with the A380 program, which has still not achieved high production rates, have cost it dearly, and the new technology A350XWB program, using carbon fiber technologies, will require a substantial investment over the next three years. With launch aid now under scrutiny from the WTO, Airbus must find additional capital for new programs.

At the same time, Airbus engineering resources must be focused on bringing the A350XWB to market on time, as the company must learn from its own A380 shortcomings as well as Boeing’s troubles with the much-delayed 787 program. EADS has indicated that it will not shortchange the A350XWB program in order to complete the NEO program.

So where does Airbus come up with the resources to complete the program.? Now it is looking to the engine manufacturers, who stand to gain through additional engine sales should the program move forward. Airbus is actively in risk sharing discussions with the engine manufacturers, each of which can’t afford to ignore about half of the current narrow-body market.

Pratt & Whitney, with its innovative GTF engine, would replace IAE as an engine supplier for the A320 family, and achieve full revenues rather than the 40% position they share with Rolls-Royce on the IAE program. This would be another win for the GTF program, already selected by Bombardier for the CSeries, Irkut for the MS-21, and Mitsubishi for the MRJ. As PW has no current position on the Boeing 737 series and a re-engining is unlikely, it will need to wait for Boeing’s all new program in 2020 to compete.

CFM International, which is already well positioned on the aircraft, needs a western platform for its LEAP-X engine, currently only selected for the COMAC C919. However, the full version of the LEAP-X, originally scheduled for 2016, will likely now not be available until 2018, with a less capable version provided to COMAC for initial C919 production.

The LEAP-X, which is utilizing similar technology to the GE90 and GEnx wide body engines, will likely be delayed in providing its full 15%-16% fuel burn reduction until the second version of the engine, with only 10%-12% fuel savings from the LEAP-X 1C model in 2016 when the NEO program would be scheduled to begin, and the 15%-16% on the more advanced LEAP-X 2C model in 2018.

However, with only 10 years between introduction of the NEO and a likely new model from Airbus in the 2026-2027 time frame, and additional two year delay for the LEAP-X-2C would provide only an eight year production run, further complicating the economics for the re-engining program.

Of course, since CFM is a joint venture of GE and France’s SNECMA unit of SAFRAN, politics may also come into play. If the French partner is delayed, would Airbus move forward with only the American firm (albeit MTU participates in the GTF program)? With the MTU participation in the PW GTF program, it is likely that the German and French factions in Airbus may be supporting different decisions.

The bottom line will come down to economic contributions and how hungry the engine manufacturers are for customers to launch their new technologies. It is likely that if one engine manufacturer moves forward, the other will need also move forward from a competitive standpoint. Pratt & Whitney appears to be in the driver’s seat – having a timing advantage over CFM. If they choose to gain market share at Airbus and invest in the program, CFM will need to react in the near term – but won’t have the advanced technology engine ready in time to successfully compete.

Will the Mid-Decade Narrow Body Revolution Exclude Boeing?

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The narrow-body aircraft market will undergo a major revolution in this decade, with new aircraft competition from the Bombardier CSeries,  Comac C919, Irkut MS-21, a re-engining of the A320 family from Airbus, and an anticipated new offering from Brazil’s Embraer.

New technology engines are driving that change.   The all-new Leap-X from CFM International promises a 14-16% improvement in fuel efficiency over today’s engines, with the first engines ready for the C919 introduction in 2016.   The Pratt & Whitney GTF, which promises a 16% plus improvement in fuel efficiency over today’s engines, will enter service with the Bombardier CSeries in 2013.

It is unlikely that Boeing can launch an all-new aircraft before 2020, given their current cash flow difficulties and additional delays with the 787 and 747-8 programs.  Boeing has increased its production rate on the current models, trying to deliver as many as possible before new competition renders those models economically obsolete.

The Risk of Economic Obsolescence with the 737NG

The 737-600, the smallest version of the 737 series, is economically obsolete and went out of production after only 8 years.  The popular -700 size, once a market leader,  is no longer generating significant customer orders, and will be the next model to become economically obsolete at Boeing.  It has been outsold by the Bombardier CS300 over the last two years, which will render the -700 economically obsolete in the 130-149 seat class.

The 737-800 is currently the mainstay of the 737 program, as the larger 737-900 has not sold well, with nearly 80% of its production with a single customer.  The 737-800, while an industry leader today, will be rendered economically obsolete by new competitors.

The new technology CS300 from Bombardier, for example, will even offer equal-to- slightly better seat-mile economics than the much larger 737-800.  This enables airlines to fly smaller aircraft, which they know they can fill, with significantly lower risk.

Airbus is almost certain to re-engine its A320 family with new technology engines.  Unlike the 737NG, which replaced about 80% of the parts from the 737 Classic it replaced, the A320NEO is being engineered for maximum commonality, with a goal of 95%.  This is a double-edged sword. On the one hand, by focusing strictly on the engines, Airbus will be able to take advantage of the 15% improvement in fuel efficiency, and combined with its new sharklets, provide a 12% improvement in overall operating costs.  On the other, the A320 is still 1980s technology combining a new-technology engine–a compromise at best.

With the A320NEO leapfrogging the 737-800 by mid decade, Boeing has two choices — either respond with a re-engining program, or replace the 737 with an all new aircraft.  Unfortunately, Boeing is in a difficult situation with each.

Re-engining the Boeing 737NG is difficult because the size of new generation engines is larger than the existing engines, which already require an asymmetrical  design to fit beneath the wings.  Because the design of the 737 dates from its introduction in 1967, when engines were skinny, it lacks the ground clearance for new technology engines without modification to engine pylons and perhaps even the front landing gear to provide clearance.  The more modern Airbus A320, which entered service in 1988, has adequate ground clearance for either the GTF or Leap-X, both of which are expected to be offered.

An all-new aircraft program from Boeing will be quite expensive, and given its current financial position after the delayed 787 and 747-8 programs, Boeing does not appear to be in a position to introduce a new narrow-body aircraft before 2019-2020, in part becausee the second-generation GTF or Leap-X won’t be ready until then.  While such an all new aircraft could take advantage of carbon fiber technologies used on the 787, Boeing will certainly to regain its expertise in program management to avoid delays.

Two new competitors from China and Russia will also emerge with new technology engines, the C919 from Comac using the Leap-X and the MS-21 from Russia using the GTF.  Each of these aircraft is expected to take a significant market share in their home countries, and both organizations expect to compete internationally as well as domestically.

Boeing will be significantly challenged mid-decade by the A320NEO at the high end of its narrowbody range, and by the CSeries at the low end of the range.  The A320 family is much easier to re-engine than the 737, being two decades newer in its basic design.  In the near term, the operating cost advantage will swing to Airbus for larger narrow-bodies.

For smaller narrowbody aircraft, the economic advantage will swing to the CSeries, which will outperform even a re-engined A319, and likely hold its own against a new technology offering from Boeing.  The CSeries is the most technologically advanced of the new aircraft, with an aluminum-lithium fuselage and composite wing, the new technology PW GTF engines, and state-of-the-art systems including fly-by-wire.  Composite material scalability offers more significant advantage for wide-body fuselages than narrow-body fuselages, and its major advantage, weight, is nearly matched by new technology aluminum-lithium alloys that are much more durable and easier to repair in high cycle operations.

Without a breakthrough in unducted fan engine technology, which would require radical new aircraft designs and require new solutions to noise issues, it is difficult to see Boeing offering a breakthrough new design before 2025.

The Bottom Line:

Boeing’s narrow-body market share will decrease rapidly near the end of this decade.  Growing demand in China and Russia will be filled with domestic as well as imported production, and strong competition from Bombardier and Embraer at the low end of the market and Airbus at the high end of the market will render the 737NG program economically obsolete.  Can Boeing afford to wait for another generation of new engine technology in 2025 and get by with its existing products?  Unlikely.  Can it provide a major breakthrough that will leapfrog its competitors by 2020?  Not unless it can pull a rabbit out of a hat and develop an airframe so much more efficient than its competitors using the same GTF and Leap-X engine technology.   We project that Boeing’s narrow-body market share will fall from over 50% today to under 25% by 2030, as it shares the market with five competitors instead of one.