UBS on wide-bodies: Investment bank UBS sees the Airbus A330ceo deliveries dropping from the current production 10/mo to 5/mo by 2017, in advance of the introduction of the A330neo late that year. As Airbus transitions from the ceo to the neo, beginning in earnest in 2018, UBS sees deliveries dipping to just 40. The forecast doesn’t yet go beyond 2018.
Likewise, analysis David Strauss sees the Boeing 777 Classic deliveries declining from the current production rate of 8.3/mo to 5/mo by 2017, well in advance of the 2020 entry-into-service of the 777X replacement. He sees Classic deliveries holding at 60/yr in 2018.
Strauss sees 12 Boeing 747 deliveries per year beginning in 2016 through the forecast period in 2018, implying a rate reduction from 1.5/mo to 1/mo.
CFM on GTF: The head of CFM International’s technology told a conference that CFM looked at Geared Turbo Fan technology when evaluating proceeding with what became the LEAP engine and decided to take a pass.
Speaking at the Morgan Stanley conference, Reuters reports that chief technology officer Mark Little said CFM shied away from the GTF over weight and reliability concerns. But he didn’t rule out using a GTF for some future engine, according to Reuters.
Analysts on CSeries: Bloomberg reports that an increasing number of aerospace analysts and consultants believe the entry-into-service of the Bombardier CSeries will slip from 2H2015 into 2016.
We’ve previously reported that we now have the CSeries EIS slipping into 1Q2016.
Bombardier continues to press ahead for a 2H2015 EIS (which, at best, we believe is 4Q2015)
Expedia on LCCs: Airline booking company Expedia conducted a survey on Low Cost Carriers and among the results: legroom is important.
Considering the recent news items about legroom and recline wars, and Ryanair’s order for the Boeing 737 MAX 200, the survey results are worth a look.
CASM Paradigm: Lower Seat Mile Cost or Higher Yield; Evaluating the GOL competition
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Introduction
As Brazil’s budget airline GOL reportedly evaluates whether to acquire 20 Boeing 737-7s or Embraer E-195 E2s, the principal of the “CASM Paradigm” is a concept worth examining.
The competition is also what might be seen as a contrary competition. Airframers agree: the airline industry is upgauging. Capacity discipline, long elusive until after the global financial collapse of 2008, has been driving load factors higher. But lowering unit costs, or the Cost per Available Seat Miles (CASM) has long been the principal measure by which airlines, OEMs and aerospace analysts measure efficiency.
Although Trip Costs of aircraft operating over a route is important, the trend toward upgauging at all levels clearly is the driving force.
Figure 1. It’s an age-old debate: the cost per available seat mile (CASM) vs trip cost. CASM typically wins, and the airline industry is migrating toward larger aircraft. Embraer, not surprisingly, thinks this has gone too far. Graphic: Embraer, reprinted with permission. Click on image to enlarge.
Embraer takes a different view, arguing that trip costs and a smaller airplane should trump the CASM obsession. A smaller airplane will mean higher yields, EMB says. A larger airplane provides lower trip costs but drives yield lower.
We visited Embraer’s headquarters earlier this month and received a full briefing on what EMB calls the CASM Paradigm. In our report today, we detail the presentation and discuss other considerations beside CASM vs Trip Costs that drive the size of the aircraft acquired.
Summary
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2 Comments
Posted on October 26, 2014 by Scott Hamilton
Airbus, Boeing, Bombardier, CFM, CSeries, Embraer, Leeham News and Comment, Pratt & Whitney, Premium
737, 737-7, 737-700, A320, Airbus, airlines, Boeing, Bombardier, CFM, CSeries, E-195 E2, Embraer, GOL, Pratt & Whitney, Southwest Airlines, WestJet
E-Jet, the project that shaped Embraer
By Bjorn Fehrm
Introduction
In a recent visit to Embraer in Brazil we got a thorough brief on the background and decision making around the E-Jet and E-Jet E2 programs. We have written about these programs before but we will now cover how they came about, what was the program objective when the decision was taken and how it panned out. Both programs have had and will have a profound influence not only on Embraer but the whole civil aviation segment between 70-150 seats. It is worth looking into how Embraer, once an also-ran in the regional market, rose to the top three spot in civil aviation after Airbus and Boeing and how EMB intends to stay there.
Summary
Figure 1. KLM Cityhopper E-jet taking off. Source: KLM
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6 Comments
Posted on October 20, 2014 by Bjorn Fehrm
Airbus, American Airlines, Boeing, Bombardier, CSeries, Embraer, Embrarer, GE Aviation, Pratt & Whitney
A350, Airbus, Boeing, Bombardier, CRJ, CSeries, E-Jet, Embraer, GTF, MRJ, Pratt & Whitney
Embraer becomes #3 commercial aircraft company on E-Jet families
Free content.
Introduction
Embraer is now the #3 commercial airplane manufacturer, after Airbus and Boeing and supplanting Bombardier, capturing 50% of the orders and 60% of the deliveries in recent years.
We examined the relevancy of the 100-149 seat sector Monday. Embraer is playing an increasingly important role in this sector.
The Brazilian company entered the regional jet field after Bombardier, designing its ERJ (Embraer Regional Jet) to go up against the BBD CRJ (Canadair Regional Jet), at a time when the latter created an entirely new market.
Deciding that the ERJ was no longer competitive, EMB rolled the dice and in the 1990s designed a clean-sheet jet, the E-Jet, that brought mainline cabin standards to the 70-120 seat sector.
More recently, with its CRJs outclassed by the E-Jets, Bombardier took the gamble and designed a clean-sheet CSeries for the 100-149 seat sector, a decision that still draws controversy. With the E-Jet facing economic obsolescence by BBD’s move, this time Embraer decided to bypass a new design and went with an extreme makeover, the re-engined, re-winged E-Jet E2.
Summary
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3 Comments
Posted on October 15, 2014 by Scott Hamilton
Airbus, Boeing, Bombardier, CSeries, Embraer, Mitsubishi, Sukhoi
737-7, 737-700, A319ceo, A319neo, Airbus, Boeing, Bombardier, CRJ-1000, CRJ700, CRJ900, CS100, CS300, E175, E175 E2, E190, E190 E2, E195, E195 E2, Embraer, Mitsubishi, MRJ-90, SSJ-100, Sukhoi
Assessing the 100-149 Seat Sector
Introduction
Oct. 12, 2014, (c) Leeham Co.: The 100-149 seat market sector has long been criticized as irrelevant because of a string of poor-selling aircraft. Boeing officials even labeled this a Bermuda Triangle. The critics fail to recognize, however, that except for the Bombardier CSeries and the Embraer E-195 stretch based on a clean sheet design, there hasn’t been an airplane specifically designed for this sector since 1983. That was the British Aerospace BAe-146, which despite being powered initially by poor engines and having a cramped cabin, sold moderately well.
The early derivatives, the Boeing 737 Classic, and the McDonnell Douglas MD-80, did well. (The MD-80, while capable of seating up to 172 in shoe-horn configuration, was principally operated within the 130-150 seat layout.) But as fuel prices increased, derivatives began to lose their appeal because they weren’t optimized for the market. Engines then in use couldn’t keep up with the rising cost of fuel and airframes designed in the 1960s/70s/80s were no longer aerodynamically efficient as required for the changing fuel environment.
Summary
• Until the Bombardier CSeries and Embraer E-Jet, there hadn’t been an airplane specifically designed for the sector since 1983.
• Engine technology and airframe aerodynamics didn’t keep up with the demands of rising fuel prices for derivative designs.
• Airbus and Boeing are ceding the sector.
• Bombardier and Embraer will “own” the sector.
• There is a valid market for the 100-149 seat sector.
Read more
25 Comments
Posted on October 12, 2014 by Scott Hamilton
Airbus, Boeing, Bombardier, CSeries, Embraer
727-100, 737 Classic, 737-200, 737-600, 737-7, 737-700, A318, A319ceo, A319neo, Airbus, B717, BAC-111, BAe-146, Boeing, Bombardier, British Aerospace, British Aircraft Corp., CS-100, CS-300, CSeries, DC-9, E-195, E-195 E2, E-Jet, E-Jet E2, Embraer, F-100, Fokker, MD-80, MD-95
Odds and Ends: AA swapping A319s for A321s; Cancelled orders; CSeries; CFM LEAP enters flight testing
American swaps A319s for A321s: This is what Flight Global reports. AA placed a large order to the Airbus A319ceo in 2011 but, having since merged with US Airways which has a large number of the small Airbus that can be redeployed on AA routes, the combined carrier will instead upgauge to the A321, Flight reports.
AA will take 28 A319ceos instead of the anticipated 65.
Cancelled orders: Aviation Week has a blog item listing a bunch of orders placed by airlines that were cancelled before delivery. AvWeek acknowledges the list is hardly all-inclusive. So, Readers, how about adding to the list? Let’s go all the way back to 1945, and this can be globally. We’ll start with American Airlines and Pan Am canceling the Republic Rainbow.
CSeries: Bombardier posted a video update of the CSeries FTV 4 tour to customer Republic Airways Holdings here.
CFM LEAP: The CFM LEAP-1C, the engine launched for the COMAC C919, entered flight testing. Reuters has this story and Aviation Week has a similar piece.
37 Comments
Posted on October 9, 2014 by Scott Hamilton
Airbus, Airlines, Boeing, Bombardier, CFM, CSeries
A319, A321, Airbus, American Airlines, Bombardier, CFM, CFM LEAP-1C, CSeries, Pan Am, Republic Airways Holdings, Republic Rainbow
New and Derivative airplanes: Some good, some not; Part 1
First of two parts.
Earlier this year, Airbus officials said they will concentrate on improving existing airplanes once the A350 enters service.
Boeing followed by saying it would not take any “moonshots” and develop new airplanes, at least for some indeterminate time.
The sentiment on the part of both companies is understandable if not disappointing for aviation purists who want to see new and innovative airplane models rather than made-over sub-types.
This is one of those cases where both schools of thought are right. (Text continues below photo.)
Later this month, we will unveil a new, updated Leeham News and Comment with a combination of paid and free content. Watch this space for more information.
New airplanes are, to state the obvious, very expensive to develop and in this increasingly technological age and demand for “smarter” airplanes that are more fuel efficient and which try to improve passenger experience while cramming as many revenue-paying passengers into the airplane as possible, becoming more and more challenging. Where it once was possible to bring an airplane to market within four years of launch, today airframers routinely look at seven years and even eight. Even derivative airplanes are now taking six or seven years to enter service from launch.
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50 Comments
Posted on October 6, 2014 by Scott Hamilton
Airbus, Boeing, Comac, CSeries, Embraer, Irkut, Mitsubishi, Sukhoi
747-8, 787, A330 Classic, A350, A380, A400M, Airbus, ARJ-21, AVIC, Boeing, Bombardier, C919, Comac, E-Jet, E-Jet E2, Embraer, Irkut, Mitsubishi, SSJ100, Sukhoi
Assessing the 70-90 seat regional jet sector
Introduction
Major orders last week for Bombardier and Mitsubishi and the release of the Airbus Global Market Forecast provide an opportunity to look at market segments that don’t get a lot of attention in the shadow of the greater focus on the A320/737 and medium-twin aisle sectors.
These over-shadowed sectors are the 70-99 seat regional jet; the 100-149 seat single-aisle market; and the Very Large Aircraft.
Due to the scope and length of each examination, we will detail these sectors in three parts.
Summary
• Embraer and Mitsubishi will dominate the 70-99 seat sector;
• Embraer and Bombardier will dominate the 100-149 seat sector;
• Airbus and Boeing have largely withdrawn from the 100-149 seat sector;
• Airbus clings to unrealistic 20-year forecast in the VLA sector, but Boeing is a non-player today and in the future.
Part 1: 70-99 Seat Sector
This is a shrinking market for the regional jet as increasing fuel prices make it more and more difficult for regional jets to be economical. Nonetheless, there are several established and new entrant players in the market:
• Bombardier, with the CRJ-700, CRJ-900 and CRJ-1000
• Embraer, with the in-production E-170/175 and E-190/195
• COMAC/AVIC, with the ARJ-21 70 and 90-seat models
• Mitsubishi, with the MRJ-70 and MRJ-90
• Suhkoi, with the SSJ-100
Read more
7 Comments
Posted on October 5, 2014 by Scott Hamilton
Airbus, Boeing, Bombardier, Comac, CSeries, Embraer, Mitsubishi, Sukhoi
737, 747-8, A320, A380, Airbus, ARJ-21, AVIC, Boeing, Bombardier, Comac, CRJ, CSeries, E-170, E-175, E-190, E-195, E-Jet, Embraer, Mitsubishi, MRJ, MRJ-70, MRJ-90, Regional Jets, SSJ-100, Sukhoi, Very Large Aircraft
Odds and Ends: Bombardier signs Macquarie Airfinance for 40+10 CS300s; 787 fire suppression
Big CSeries order: Bombardier today announced a firm order for 40 CS300s with options for 10 more with lessor Macquarie Airfinance. This brings firm orders to 243 and orders and commitments to 563.
This is the order that was has been pending since the Farnborough Air Show, and which was delayed perhaps a month because of the grounding of the test fleet from May 29. Flight Global initially reported that Macquarie could be lined up to place an order, and we followed up with some additional information July 29.
Macquarie is a small lessor by today’s standards, with 128 aircraft in the portfolio. These have all been acquired through purchase/leasebacks or via a portfolio purchase from other lessors. The CSeries is the first speculative order placed by Macquarie. As such, this is a major endorsement of the CSeries program. It also makes Macquarie one of the largest customers: Republic Airways Holdings, a launch customer, ordered 40 and optioned 40; Lufthansa Group ordered 30 plus options; and Ilyushin Finance Corp., a Russian lessor, has ordered nearly 40.
Macquarie bypassed Airbus and Boeing A320s and 737s for new orders. It has 63 and 57 in its fleet already and the backlogs for new orders stretch to 2020.
787 fire suppression: The Wall Street Journal reports that regulators have ordered changes in the Boeing 787 fire suppression system.
Boeing initially issued a service bulletin in May but regulators have now made the fix mandatory. The order covers 88 earlier versions of the 787; there are more than 150 in service today.
Coincidentally, a LOT Polish Airlines 787 made an emergency landing today in Scotland because of a faulty fire warning.
29 Comments
Posted on September 26, 2014 by Scott Hamilton
Airbus, Boeing, Bombardier, CSeries
737, 787, A320, Bombardier, CS300, CSeries, Macquarie Airfinance
Odds and Ends: UBS on wide-bodies; CFM on GTF; Analysts on CSeries; Expedia on LCCs
UBS on wide-bodies: Investment bank UBS sees the Airbus A330ceo deliveries dropping from the current production 10/mo to 5/mo by 2017, in advance of the introduction of the A330neo late that year. As Airbus transitions from the ceo to the neo, beginning in earnest in 2018, UBS sees deliveries dipping to just 40. The forecast doesn’t yet go beyond 2018.
Likewise, analysis David Strauss sees the Boeing 777 Classic deliveries declining from the current production rate of 8.3/mo to 5/mo by 2017, well in advance of the 2020 entry-into-service of the 777X replacement. He sees Classic deliveries holding at 60/yr in 2018.
Strauss sees 12 Boeing 747 deliveries per year beginning in 2016 through the forecast period in 2018, implying a rate reduction from 1.5/mo to 1/mo.
CFM on GTF: The head of CFM International’s technology told a conference that CFM looked at Geared Turbo Fan technology when evaluating proceeding with what became the LEAP engine and decided to take a pass.
Speaking at the Morgan Stanley conference, Reuters reports that chief technology officer Mark Little said CFM shied away from the GTF over weight and reliability concerns. But he didn’t rule out using a GTF for some future engine, according to Reuters.
Analysts on CSeries: Bloomberg reports that an increasing number of aerospace analysts and consultants believe the entry-into-service of the Bombardier CSeries will slip from 2H2015 into 2016.
We’ve previously reported that we now have the CSeries EIS slipping into 1Q2016.
Bombardier continues to press ahead for a 2H2015 EIS (which, at best, we believe is 4Q2015)
Expedia on LCCs: Airline booking company Expedia conducted a survey on Low Cost Carriers and among the results: legroom is important.
Considering the recent news items about legroom and recline wars, and Ryanair’s order for the Boeing 737 MAX 200, the survey results are worth a look.
14 Comments
Posted on September 16, 2014 by Scott Hamilton
Airbus, Boeing, Bombardier, CFM, CSeries
Airbus, Boeing, Bombardier, CFM International, CFM LEAP, Expedia, GTF, low cost carriers
Embraer and Bombardier: the tale of different companies, histories and fortunes
Last month we did a situational analysis of Boeing and Airbus and we promised to do the same for Embraer and Bombardier. Our follow-up article took longer than planned, as we wanted to include the rather significant changes that have transpired at Bombardier in recent weeks. Material for the analysis is the first half 2014 financial and operational results of the aircraft manufacturers but also information we got when we sat down with the Marketing managers of the two companies at Farnborough, Embraer’s Claudio Carmelier and Bombardier’s Philippe Poutissou. Unfortunately, the latter is no longer in his job, having been replaced in a series of management and corporate restructurings at Bombardier.
Status first half 2014
The situation in the two companies could not be more different. Embraer is financially healthy with well-selling aircraft programs, both on the commercial aircraft side (E-jet) and the business aircraft side (Phenom, Legacy). Embraer is well positioned for the future with a well-received update to its E-jet program (E-jet E2 ) . Bombardier on the other hand, has problems. Its financial situation is strained with too many new aircraft programs eating up cash (CSeries, Learjet 85, Global 7000/8000) and their currently active programs have in some cases seen their zenith in the market (CRJ, Challenger 600 and, arguably, the Q400). Read more
25 Comments
Posted on September 15, 2014 by Bjorn Fehrm
Bombardier, CSeries, Embraer, Pratt & Whitney
Bombardier, Comac, CRJ, CSeries, E-Jet, E-Jet E2, Embraer, GE, GTF, Pratt & Whitney, Q400
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