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May 27, 2024
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Today’s show started with a bang – a predictable bang, but still a bang.  Airbus confirmed the worst secret of the show by announcing it was offering the A330neo.  We will address the A330neo and the competitive 787 is our subscriber service and explain how we see this new battle playing out early next week.  Now for our other OEM visits.

GE provided a briefing to the media and gave an extremely upbeat assessment of its business.  The company is seeing strong growth across the board.  Its products are on great platforms which are selling well.  For example the LEAP (sold under CFM, a partnership between GE and SNECMA) is on the MAX and A320neo.  Both programs are selling like hot cakes in a Siberian winter.  Its GEnx on the 787 is doing very well, and now that the first PIP is installed, GE believes its going to accelerate ahead of Rolls-Royce.  Speaking of 787, GE appears pleased that Airbus did the A330neo and also has no regrets about not bidding for the program.  Indeed they believe Rolls was right for the A330neo and wish them well.   On to their GE90, which they say continues to deliver exceptional performance (99.98% dispatch) on the 777-300ER.  They are very proud of this engine and consequently delighted with what are are seeing for its successor, the GE9X.  Making extensive use of additive manufacturing, GE described how they can design and create a combustor this way in two weeks rather than 36 without additive manufacturing.  The time saved allows for continuous refinement. In technology terms, GE looks to be in a very compelling position.  Just as they enabled the 777-300ER become the airplane it did, so they will enable the 777X as well.  The don’t need to chase any new programs.  We plan to do a deeper dive on this company later this year.

Embraer proudly announced a new E2 customer in Trans States Holdings from the US.  The order was for 50+50 E-175s.  This model will be the last of the E2s to reach EIS in 2020.  The order is intriguing – it is a near copy of the airline’s earlier order for MRJs.   When questioned about this, the airline’s CEO assured the media they want both aircraft.  Its a tough one to comprehend.  Not surprisingly the order “is subject to certain conditions”.  Well yes that makes more sense.  Conditions include not least the fact that this aircraft will weigh some 92,000 pounds and be way outside the current US Scope Clause of 86,000 pounds.  We spoke with Embraer about this and they believe their aircraft will be so attractive that mainline airlines will want them and push to modify the scope clause.  Since their current E-175 Enhanced delivers over 6% better fuel burn, they are confident the E2 will be as attractive.

Air Lease announced its order for 25 A330neos and 60 A321neos.  While we will deal with the implications in detail later, suffice to say the A330neo is off to a roaring start.  Having Steven Udvar-Hazy as a customer is as close as any OEM can get to a kiss of of life for a program.  Remember it was  Mr Hazy who essentially aborted Airbus’ first A350 as insufficient.  Yesterday Boeing referred to the A330neo as essentially the same plane that failed before.  Mr. Hazy’s order overcomes that cloud.  Mr Hazy was joined at the event by President and COO John Plueger, who is vocal n his assessment of the A330neo.  Indeed, it was pointed out that there are three things airlines worry about – fuel burn, labor cost and capital cost. Airbus’ A330neo hits two out of those three.  Mr Plueger stated he sees Boeing facing a pricing issue on its 787s because of the new Airbus.   The other order for 60 A321s almost gets lost in the first order, but is a good endorsement for the A321 program.  Air Lease spent $14bn at retail prices today.  Of course they don’t pay retail – not even close.

Bombardier followed its Saturday pre-show announcement of 24 CSeries orders for Falco Leasing with two new CSeries customers Petra Air for 2 CS100 plus 2 CS300 options, and Loong Airlines of China with an order for 20 CS100.  In addition, it announced two previously unannounced customers, Falcon Air Service for 2 CS300 and Air Baltic for 3 additional aircraft to the 10 already on order (7 options remaining).  After a couple of dry air shows, commitments for 42 additional aircraft brings the total commitments (orders and options) to nearly 500, and puts CSeries at its goal for 20 customers by EIS.

ATR announced a major order from Nordic Air Capital for 25 firm plus 50 options for ATR-42 aircraft.  ATR believes there is a strong replacement market for 50 seat turboprops, and currently offer the only game in town.  ATR has a significant number of unannounced aircraft that we may hear more about tomorrow with additional announcements.

Boeing announced several 737Max orders, including Monarch.  We could expect more news from them tomorrow.

We will be back with a report tomorrow evening.




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