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Emirates’ recent order for another 50 A380s came with a catch.  Its prior A380s came with the Engine Alliance (GE & PW) GP7200 engine.  But with the latest order the airline has thrown open engine orders to both Rolls-Royce and Engine Alliance. Is this a bluff?

Rolls-Royce announced it now has been given approval for its EP2 on the A380 engine known as the Trent 900.  The Trent 900 EP2  offers a fuel burn improvement of up to 0.8% and will become the new build standard for Trent 900s once full certification is achieved.  Although the GP7200 engine has the most orders on the A380, Rolls-Royce has the most customers.  Winning the Emirates order would be a huge win for Rolls-Royce and we expect the company to make every effort to pull this off.On the other hand, the GP7200 engine has been doing very well.  To date the GP7200 has had a 1% better fuel burn than the Trent 900. So the EP2 update the the Trent 900 brings it closer to the GP7200’s fuel efficiency.  From what we understand, the GP7200 numbers look very good in Airbus’ “Orange Book”. Its been this way for a long time too.  Clearly the Engine Alliance team will not give up the fight now.

Emirates seeks a 10% improvement in fuel burn.  As matters stand the request is reasonable – Emirates president Tim Clark said “…the 380 needs to get the benefit of what is going on in the mid-sized fans and the twins. To leave the 380 in the position where it isn’t [improved] doesn’t make any sense.”  Given what we see with the latest generation of engines there can be no argument.   Besides Mr Clark is aware of the compelling numbers for the GE9X and Trent XWB.

In the end, looking at the options, it might seem Mr Clark is bluffing.  Neither Rolls-Royce nor Engine Alliance will seek 10% better fuel burn out of their current engines given only 200 potential engine orders.  A380 sales, at present, don’t make this a rich vein to mine for new investment. The investment required to tweak the next generation of engines (i.e. Trent XWB or GE9X) probably cannot provide the ROI to justify the expense.

Doric is talking about tweaking its A380s – “When we put the proper seat count on the plane, the economics are unbeatable and will remain unbeatable,” Doric Chief Executive Officer Marc Lapidus said.  Mr Clark is also talking about 11 abreast.  This, in our view, is the way to get closer to 10% better fuel burn. For Emirates, this means 34 (v1) or 35 (v2) extra economy seats.  These extra seats provide nearly 9% more capacity for probably the same fuel burn.

Besides extra seating will not require the engine makers to invest too much.  Which is probably why Engine Alliance’s President Dean Athans uses words like “…a whole suite ranging from little things to longer term, more substantive changes…” Consequently we expect to see the engine makers come up with some better numbers, but the bulk of Mr Clark’s 10% goal will see a lot more seats on the Emirates A380s.

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