Looking ahead at this time of year, there are several key events and stories that we know will occur in 2013. In this post, we’ll comment about them, along with our prognostication on how we expect they might turn out.
American-US Airways merger
An announcement is expected in January on the potential merger between American and USAirways. We expect this to occur, with the superior management team from USAirways taking control of the larger airline. This would be a plus for oneworld, and hopefully eliminate the “attitude of arrogance” that has surrounded American that enabled them to ignore economic realities and kick the inevitable Chapter 11 bankruptcy can down the road a few years too far.
First Flights of New Aircraft
The Bombardier CSeries and Airbus A350 are due for first flights this year. The CSeries will bring a new level of efficiency to the narrow-body world, and in their high density configuration, compete in the 160 seat market. The A350 will be economically superior to the 777, forcing Boeing into a decision on how to upgrade their most successful current wide-body model. Each of these aircraft will bring new technology to the market, provide high efficiency, and environmental gains. We look forward to welcoming them into service in 2014 and 2015, respectively. We expect additional sales of the CSeries once the aircraft is flying, and that A350 will continue to have market success, particularly the -900 and -1000 models. Both will have market success.
Final Definition of the 737MAX
The Boeing 737Max appears to be another major redesign to the 737, much like the 737NG compared to the 737 Classics. Needing higher ground clearance for the all-new LEAP engines, changes in landing gear have been made, as well as aerodynamic improvements through new winglets and an updated tail cone. While operational economics are excellent, current estimates of runway performance numbers, for example, are not impressive. However, we expect additional improvements from Boeing before the design concepts currently being floated are finalized and that additional changes will make the aircraft economically competitive with A320neo.
Final Definition of the LEAP engine
The LEAP engine will be bringing a number of new technologies to market, including extensive use of advanced materials and ceramic composites within the engine. These new technologies entail both risk and reward, and we expect the LEAP to be a competitive engine in terms of fuel burn and noise, despite its additional length and weight when compared to current engines. LEAP is already a market success, but the key for CFM will be whether the new technologies can actually achieve the low maintenance costs it has projected. If they can, this will be a very successful engine.
The Pratt & Whitney GTF Flies
The new technology Pratt & Whitney GTF will enter service on the Bombardier CSeries, and will be in flight test mode this year. We expect this engine to meet its projected performance levels, and be the first new technology narrow-body engine to enter the market since the V2500. With a relatively straightforward design, and low parts count, the GTF has considerable room for further fuel efficiency growth, as well as offering low maintenance costs because of fewer parts than competing engines.
Boeing launches 787-10
A stretched version of the Boeing 787 will finally be authorized, and provide a strong competitor to the A350-900. Despite the initial in-service difficulties with 787, we believe Boeing will iron out the problems and that production and deliveries will be back on a normal schedule by year end. We also expect the 787-10 to incorporate improvements from the -9 model as well as enhancements unique to the new aircraft as Boeing continues to gain additional experience with its high technology aircraft.
Boeing further defines 777-X
With A350 flying, Boeing will need to provide firm definition for where it is going with the 777, and will further define the 777-X this year, with a significant potential order from a Middle-Eastern carrier likely to launch the program. The 777-9X, with more than 400 seats, will effectively provide a more efficient replacement for the 747-8i, which we believe to be dead in the water as a passenger aircraft in a high fuel cost environment. As Boeing further defines the technologies to be incorporated in 777-X, it will provide a counterpoint to A350.
Airbus furthers development of A30X narrow-body
Airbus will be floating concepts for A320 replacement in the 2026-28 time frame. Design concepts are already emerging, including advanced materials, lightweight systems, improved aerodynamics, and new manufacturing techniques that would “leapfrog” 737MAX significantly. While no decisions will be taken in 2013, airline reaction to new concepts is expected to be strongly positive, as the A320 celebrates its 25th anniversary in service.
The Obesity Seat in Economy
A triple seat that measures width of 17-17-20 inches rather than today’s 18-18-18 inches might provide Airbus narrow-body operators with an enhanced revenue opportunity – offering an extra wide seat for a higher price. Given trends in demographics, as well as trends in ancillary revenues, this seems inevitable.