Premium #200 – 2015 – A Quiet but Interesting Year

Let’s review some of the key events from this year. In January, Delta posted record profits, and rumors swirled about a potential Turkish Aerospace and Antonov JV, while the first wavering in record aircraft backlogs, with increasing deferrals and cancellations, were noted - albeit not perceived as a problem for best selling models. In February, Embraer's KC-390 conducted its first flight. EuroLot was liquidated, with much of the fleet picked up by parent LOT, the Falcon 8X completed its maiden flight, ICAO recommended a 15 minute reporting standard for over-water flights in the wake of MH370, and China and Russia announced collaboration on a new wide-body aircraft. Near the end of the month, we nearly froze watching the CS300 make its first flight. In March, the war of words between the US Majors and Gulf Carriers, led primarily by Delta, escalated with charges of unfair competition and economic subsidies. A tragic accident at Germanwings caused the industry to re-examine its pilot training programs, as well as software overrides for aircraft aimed at preventing accidents, and their impact on human factors (two people on the flight deck at all times). The impact of health monitoring systems and their potential to change MRO was discussed by several OEMs as new technologies are about to be introduced with new aircraft. In April, the A380 celebrated its 10th anniversary as a modest market success, certainly less than what Airbus had hoped, but still a major game changer and enabler for Emirates. The month closed with a simple iPad software update resulting in 74 flights being delayed at American as the EFB application had a software conflict. This further raised the debate regarding dependency on software for pilots in emergency situations, and the availability of back-up procedures for the industry as aircraft become more and more e-enabled. During April, a computer hacker claimed he could gain control of a United Airlines aircraft during flight from the passenger cabin, raising additional concerns regarding cyber-security, in particularly the connectivity of the cockpit and cabin using the same communication nodes as a potential vulnerability. In May, it became clear that the A350 was having a rockier start than planned, and was falling short on deliveries due to supply-chain challenges in Toulouse. The war of words between the ME3 spread to Europe, and culminated with Etihad-owned Alitalia leaving the AEA after positions negative to the ME3. June brought the Paris Show, and a relatively quiet show at that. Liebherr and Rolls-Royce announced a joint venture to build a gear for the Ultrafan engine, expected to enter service in the 2025 time frame. Bombardier was the darling of the Paris Show, bringing the CS100 and CS300, and illustrating just how quite the P&W GTF really is to the world. Boeing brought the 787-9 and illustrated the performance envelope of the aircraft in a spectacular flight display. The A350-900 was there too, with Qatar Airways having a larger fleet presence than most airframe manufacturers, thanks to its innovative CEO. Mr. Al-Baker knows how to build a brand. But overall, Paris was quiet, particularly for new orders, as the industry started to digest its backlog, and recognize that decisions for aircraft six to seven years in the future need not be made today. The order rush for neos and MAX abated to a degree. In late June, deliveries of the A400M resumed after a fatal crash in Spain earlier in the year, good news for that program. July was fairly quiet as we examined the implications of new aftermarket initiatives from several manufacturers. Boeing, for example, completely re-tooled its Gold Care program and accumulated an impressive number of customers and aircraft on performance-based contracts, also known as "by the hour" maintenance programs. While the airframe business hasn’t yet reached the penetration levels of the engine side, new technologies, including health management systems and e-enabled aircraft, are increasing the value added that OEMs can provide from information. Also in July, FedEx ordered another 50 767s. An amazing piece of news for a program the 787 was supposed to eliminate. August brought little news, but our analysis showed the industry entering an order down cycle, as the industry is “catching up” to the record backlogs on the books. We project a slight dip in orders over the next two years before growth resumes. Boeing firmed up the 777X configuration in August, and the MS-21, while an excellent design, appears to be impeded by new cold war politics. But Airbus did brighten the month filing a patent for a new supersonic jet to make for fast trans-Atlantic crossings. In September, Bombardier conducted a noise demonstration in downtown Toronto to support its customer Porter’s efforts to increase the runway length to enable jet operations from the convenient downtown airport. Airbus dedicated its new A320 family assembly line in Mobile, making it a US aircraft manufacturer (as well as Chinese, German, British, French and Spanish), with the ability to double the size of the new facility, set to produce four aircraft per month (primarily A321s), should the market grow. Boeing also began production of the 737 MAX, due for EIS in late 2016/early 2017. October brought final assembly of the first Embraer E2 prototype and a roll-out for customers. The A320neo resumed flying with the P&W GTF after an engine incident earlier in the year, and is on target for certification, while the LEAP version built hours towards its certification mid-next year. A freighter conversion program for the Saab 340 was also announced. The USAF selected Northrup Grumman for its new bomber. Boeing wasn't happy. At the start of the month, another terrorist event in the bombing of a Russian A321 killing 224 people. November brought the roll-out of the COMAC C919, and a major financial bailout by Quebec for Bombardier, investing in both the CSeries program and the rail transportation division in two separate transactions. These investments will provide the capital needed by Bombardier to complete the CSeries. Emirates also introduced a 615-seat version of the A380, which will enable it to remain competitive on a seat-mile economics basis with the newest twin-engined competitors. While other airlines struggle, Emirates seems to have no problems filling this aircraft. Airbus patented a passenger container idea to speed boarding and deplaning. November also saw the Mitsubishi regional jet have its first flight - the first Japanese commercial aircraft to take to the skies in five decades. As the month numbers came in Airbus looks like being unbeatable in orders while Boeing has out-delivered Airbus. Depending on your perspective, one (or both) is the winner. The Chinese ARJ21 gained Chinese certification just prior to the end of the western new year, and have Chinese officials optimistic for 2016. As we roll through December we await the first A320neo delivery. Certification came as expected early in December. (Bombardier's CSeries was supposed to have a two year head start on the neo) Airbus says they are ready and await the customer's instructions. The first delivery was supposed to go to Qatar, but will go to Lufthansa on December 22. This time last year Qatar pushed the first A350 delivery right up to the holiday period. Meanwhile, like clockwork, Boeing rolled out its 737MAX exactly as planned four years ago - wow, an on time aircraft program is still possible! The new HondaJet was granted its FAA certification. The MC-21 is supposed to be rolled out by year end, but that looks unlikely, the fuselage is assembled but the wings have yet to be attached. Incidentally, we are now about 650 days since MH370 was lost - and no closer to knowing anything. Finally, it is expected that UAVs will be a huge hit as a Christmas gift. Maybe Santa has one lined up for you? Happy Holidays and wishing you a peaceful, safe holiday and successful 2016.

US Flight Planner	Airbus vs Boeing
US Airline Schedule Performance	Daily Production & Deliveries

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