Commercial aviation is a very high stakes game.  Get it wrong and you’re lucky to get a second chance.  In order to reduce risk the players hedge bets.  For example, in the case of OEMs, a typical solution is to offer engine choices.

Of late, this has not been occurring like it used to. Whereas Airbus offers engine options on the A320 family, Boeing does not on its 737. It also does not on some 777s and the 747i.  Airbus at present does not offer an engine option on the A350 – but really it would like to.

The decision by Boeing not to offer engine options on some its aircraft is based on its strong relationship with GE.  This is a relationship that works on multiple levels – GE is both a vendor and a customer. Therefore it is a powerful relationship that is hard to dislodge.

But let us walk down a different path.  Here’s a provocative thought.  Airbus is working very hard to get its A350 XWB to EIS on time.  After the A380 and A400M as well as early A350 challenges, this is totally rational.  Indeed, the putting of the A320 NEO on pause is a reaction to greater risk aversion at Airbus.  Too much risk on the table is an distinctly unpleasant thing and to be avoided.  Hence Mr Enders and Mr Gallois recent statements.

However even as the NEO project gets slowed down, Airbus has not reduced enough risk in our view.  It is facing some risk with the A350 XWB – specifically with engine choice.

Airlines want choices – they need a strong Airbus and Boeing to fight for business.  They also want GE, Rolls-Royce and P&W to fight for business.

Step back and think about this.  Airbus clearly wants another engine on the A350 XWB.  GE is their first choice.  But GE is reluctant because of a threat to their investment in the 777’s success.

Given that, let us now throw a wild card into this mix.  It is obvious that into this perceived “gap”, where Airbus wants an alternative and GE has managed to avoid a commitment, there should be an irresistible opportunity for P&W.

P&W is, based on everything we have come across, growing ever more delighted with its GTF.  The engine is apparently proving to every bit as good as they say it is.

With that backdrop we can share that P&W’s future big commercial engines will all use GTF technology.  The current GTF has caused friction with Rolls-Royce and therefore P&W is unlikely to say anything publicly about next steps.  But there can be no doubt within the corridors at 400 Main Street in East Hartford  there has to be talk about what comes next.  P&W has a partnership with GE on the A380’s GP engine.  Therefore P&W is going to speak quietly in-house.

The GP engine has been spoken of before as a possible A350 XWB powerplant. But there is the “GE/777 issue” and the idea has gone nowhere.  But the quiet discussions internally at P&W are surely about a widebody option as a follow on to the current GTF.

We have reason to believe this talk is about a ~75k thrust engine.  The current GTF has been tested to 40K, and P&W knows a lot about the 70K  engine class.  The gap to bridge is therefore, in our view, eminently bridgeable.

With a 70K thrust GTF, P&W offers Airbus a choice.  Just as the current GTF is a game changer, a 70K thrust version will also be a game changer.  Imagine Airbus being able to offer an engine that is quieter and significantly (“double digit”) more fuel efficient. The A350 XWB numbers would be of even greater interest to airlines then.

Green is in and the GTF technology totally plays to this.  But equally important, P&W can play this card even as GE is reluctant to do anything on the A350 XWB.  Rolls-Royce will be miffed but what can they do?  The current 787 program underscores why Boeing is so happy they have engine choices.  Imagine the 787 program not having the GenX – the testing and certification process could be held up until the Rolls-Royce engine has Boeing’s full confidence.

Imagine then Airbus’ angst if its A350 XWB testing and certification program is dependent on one engine. Not a pretty sight is it?  Rolls-Royce builds fine engines. But like everyone, it also runs into issues with new technology and products. The risk is there for all to see.

The necessity of options seems to be telling P&W to move ahead rapidly, if quietly, with a 70K GTF engine.  The window of opportunity with the A350 XWB is wide open to exploit.

To reduce their own risk, and to consider how disruptive the GTF has been already (Airbus A320 NEO), imagine what a P&W 70K GTF could mean to a re-engine program for the 777-200?   That is a fine airplane under threat from the A350 XWB and Boeing is going to have to react.   Boeing might be thrilled at a GTF option because a customer like United has a bunch of early 777s that could have a great future even as United takes A350 XWBs on board.  Which is to say that a 777 GTF would be highly disruptive – just the thing airlines would really like.

It is always good to have disruptive technology on your side. Which is why Airbus and Boeing are likely to view a 70K GTF as a very interesting idea.

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