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The issue of an A380neo reappeared again at the recent A350XWB first delivery event in Toulouse. While the question wasn’t directly related to the A350XWB, Qatar did have its fourth A380 outside the delivery center and clearly it is an item on the mind of not only Airbus and Emirates, but also Qatar’s CEO. Mr. Al-Baker deftly parried the question and expressed confidence in the aircraft as it is.

This does not mean Airbus can avoid the inevitable A380neo – it is not a matter of “if”, it is a matter of “when”.

We expect that both Airbus and Emirates will want an engine competition. This ensures an honest outcome for them. Other A380 operators will also benefit.

Looking at the A380 program today, there is no doubt that the economic rationale for developing a neo is tough. The decision is being forced on by Emirates. Emirates is forcing this because of the expectations that the 777-9 will offer significantly better economics than the existing A380. Since Emirates won’t be flying a 777-9 before 2020, Airbus has some time to work on an A380neo, but not a lot. To have a response ready for 2020, has to start the process of defining an A380neo and a stretched A380-900 soon, ideally in 2015. That aircraft definition then has to be shared with Rolls-Royce and Engine Alliance.

Both engine firms will need to see an attractive return on investment to bid. Currently, the outlook appears on a distant horizon, making potential investment in a neo engine unattractive. Therefore, engine manufacturers will need to select something from their current inventory so as to minimize capex and costs. The A380neo program risk is quite real — Mr. Leahy’s enthusiasm notwithstanding. An industry rule of thumb says that for each 1% improvement in fuel burn, an engine maker has to invest $100m. To achieve the >10% in improved fuel burn that Emirates wants is a $1bn bet. This is why has not raced forward to engage with engine makers on an A380neo.

There are a number of factors that one needs to consider pondering the case for an A380neo:

  • Can Airbus’ plans give the engine makers time? This can be done by working on the A380 design in the shorter term (like adding sharklets) to start a fuel burn improvement process. In the longer term this gives engine makers time to work on improved engines.
  • A four engined aircraft thrust focuses on climb rate, not takeoff. Therefore engines are likely to be de-rated from current options. The Trent XWB gives Rolls-Royce a potential advantage here. Engine Alliance (EA) has to come up with something novel, if not new.
  • Is there a way can make the engine selection process more attractive? For example, even as an A380neo is being considered, there is also a potential engine required for a potential A350-1100. The A350-1000 engine is an evolution of the base engine on the A350. Moreover since the A350-800 is out of the picture Rolls-Royce’s A350 plans have taken a dent. However, the exclusivity on the A350 program gives Rolls-Royce an advantage on any growth A350.
  • Pratt & Whitney and GE both seem reluctant to invest in the A380neo. However we think the EA team will be pressurized by and Emirates to come up with an option.

Since we expect engine makers to deploy existing engine technologies, we think Rolls-Royce is likely to use its Trent XWB with 84K thrust as the basis for an A380neo engine. The Trent XWB is a fine piece of engineering and state of the art.

EA faces an even more complicated response. GE Aviation David Joyce is uncertain about the business case. But note the language used – “a new engine”.   The complication goes one step further. EA is a one-trick pony. The company makes one engine (GP7200) found on one aircraft, the A380. It has been very successful however, and it has the largest market share on the A380. Moreover Airbus’ Orange Book shows the GP7200 as the more fuel efficient of the two engine choices. This gives EA a good starting point looking ahead at an A380neo.

Since we believe that Airbus (and Emirates) will pressurize EA for some sort of response, we expect EA to turn to its partners and forcefully request an offering. This request is not an insurmountable hurdle. Mr. Joyce, perhaps, does not need to offer a “new engine”.

We think just like Rolls-Royce, EA would turn to their current offerings for a solution. It would perhaps mean spending more money than Rolls-Royce for an A380neo solution, but it should not be prohibitive even with a stretched out ROI. After all, both EA partners see a benefit in bleeding Rolls-Royce. That outcome should offer EA partners a lot of value, therefore improving the ROI.

Our thinking would be that GE could offer an engine based on the GP7200. The latest A380s powered by the GP7200 benefit from GE’s GEnx, offering improvements over the earlier GP7200. An EA engine for the A380neo, which we hypothetically call the GP8000, would improvements from the GEnx program and the Pratt & Whitney GTF.

Taking the core of the GP7200 engine, with refinements from the GEnx and adding a larger fan plus a gear from Pratt & Whitney could create a disruptive offering. Take a look at what we have in the market today.  Bypass ratios are rising and the GTF is the leader by far.

2014-12-29_14-39-31A key number here is thrust – we estimate the A380neo and stretched -900neo requires 80,000 plus pounds of thrust per engine. This means a current Trent XWB could be used and the GP7200 would be uncompetitive. But what about an engine combination that we describe above?

Below are our estimates of what a GP8000 engine might entail.

2014-12-29_14-39-44Because of the geared fan, a potential GP8000 engine could have a bypass ratio much higher than the current 8.8 on the GP7200. This also means deploying a larger fan than the current 116 inches. We estimate such an engine offers some key advantages over the GP7200:

  • Fuel burn reduced 12%
  • Noise reduced 40%
  • NOx reduced 15%
  • CO2 reduced 12%
  • Maintenance reduced 7%

The maintenance savings are very important and, for an airline like Emirates where dust causes more frequent maintenance, savings would add up quickly. The lower fuel burn is at the target Emirates’ CEO has requested. And the GP8000 offers much improved green numbers too. The current A380 is already quiet, so an even quieter neo version opens up more slot opportunities at noise constrained like Frankfurt, Heathrow and Paris to mention three important A380 hubs in Europe.

The GP8000 might utilize a gear ratio of three to one, with potential to later increase the ratio to further improve performance. These improvements could be far simpler than what Rolls-Royce would face tweaking their Trent XWB, which is not geared. Combining the Pratt & Whitney geared-fan drive system with the core of a refined GP7200 could produce an interesting alternative to the Trent XWB.

So while GE’s Mr. Joyce might not feel comfortable about a new engine for the A380, deploying existing GEnx technology in the core of a new design might be acceptable. The expense may annoy – but think of the damage losing the A380neo would do to Rolls-Royce, which has become nearly exclusive on new wide-bodies. That impact will be long lasting and constrict Rolls’ R&D on future engine programs.

Even though our GP8000 idea is entirely speculative, we think EA might want to, or perhaps already has, started to think along these lines.

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