New competition in Large Cabin Bizjet Segment

Yesterday Gulfstream announced their two new aircraft offerings in the Large Cabin segment, the G500 and the G600, powered with PW800 engines from P&WC. A very good summary of what these look like and what they can may be found in a long article from Aviation Week.
These aircraft borrow a lot of technology from the top-of-the-line G650(ER). In some cases, they top the G650, for example in the cockpit design.
Although Gulfstream says that these two new aircraft are additions to their product line and are not intended to replace the G450 and G550, I believe at least the days of the G450 are counted. If you read that the G500 will carry less fuel than the G450, but the G500 will fly 5000nm at M0.85, whereas the G450 flies 4220nm at M0.8. Moreover, the G500 has a cabin that is 2.5ft longer and 7 inches wider, providing a higher pressure in flight, making traveling more comfortable. Also, noise will be less, both out- and inside.
So I would not be surprised to see a run on these models comparable to the G650 when this aircraft was first announced. Production slots were sold every minute back then.
What will be the reaction from Bombardier. The G500 and G600 are clearly aiming at the Global5000 and Global 6000. We get a few hints when we search the Internet for the term "BR700NG": for example take a look here: GE is not the only one going for high tech ceramics in a business jet engine (the Passport 20 in this case). RR will also incorporate parts from this material in their BR700NG. And I am sure that
  • the BR700NG will be the engine for an update of the Global 5000/6000
  • that this update will be announced at the NBAA in Orlando next week
So what is Airbus vs. Boeing in the commercial aircraft arena is Bombardier vs. Gulfstream in the bizjet arena (with more than a little bit of noise from Dassault although).


Boeing's B737 rate hike

I just read a very good comment from Richard Aboulafia regarding the rate hike for the B737MAX announced by Boeing last week.
I think he is right. The possibility that this rate hike will NOT be executed is higher than the possibility that we will really see the hike. Aboulafia points out several reasons why that is.
And there is another one (at least in my mind): and that is the fast pace that Boeing wants to transition from the B737NG to the B737MAX. The article by Dominic Gates points out that by 2018 when the rate hike would be kicking in the output of the B737MAX would reach 26 aircraft a month, thus 50% of the production. And another article at Flightglobal states that the last B737NG will be delivered to Ryanair in the second quarter of 2019. So the plan is to transition from the NG to the MAX in less than two years. This has two consequences:
  1. I often wrote about how many B737NG orders Boeing would need to fill the B737NG production slots until the B737MAX will take over full production. I assumed that the transition will take place in a similar manner than Airbus plans it for the A320. The hast A320ceo will be delivered in 2018, almost three years after the first delivery of the A320neo. Now if Boeing cuts the transition time to under two years, a lot less open B737NG production slots have to be filled. In a first guess I would say about 250.
  2. There is a big challenge for all B737MAX suppliers which have to produce parts that changed for the B737MAX compared to the B737NG design. The one supplier that will be most challenged is CFM (and CFM's suppliers as well). They have to handle the ramp up of the LEAP-1A for the A320neo and the LEAP-1B for the B737MAX almost simultaneously.
Airbus is in a little bit better situation as they have to engine suppliers, so the risk is not that big. The first engine (PW1100G) ís already flying on the first A320neo, the second one (LEAP-1A) is due to fly in late October/early November. Although the date for the first flight on GE's flying test bed for the LEAP-1A and the "sister engine" LEAP-1C (for the C919) seems to have already slipped more than one time. Originally the LEAP-1C should have had first flight in May, then later in the summer, the early September and then late September. It is now early October and I haven't seen a press release (and I fully expect one) nor have I seen N747GE (fitted with the LEAP-1C) flying on flightradar. Let's see if N747GF (with the LEAP-1A) will take to the skies in the next four weeks...


A330neo vs. B737MAX and A320neo first flight

As always, yesterdays "Large Aircraft Panel" at the ISTAT Europe conference was very amusing. Unfortunately I can not attend in person this year, but what you can read via twitter and in the press is almost as good as being there. Here you can read what Boeing's VP Marketing Randy Tinseth thinks about the A330neo:
"It is a 1970 fuselage which is heavy and was abandoned for the A350 family. The wing was built in the 1980s while the Boeing 787 engine is not optimised for the A330neo."
Well, maybe he should have had a chat with his own folks at Boeing - what is the B737MAX?
In Tinseth's words I would say:

A 1960s fuselage with a 1990s wing with an 2010s engine compromised by a 1960s engine fan diameter.

In other news, Airbus COO John Leahy told the audience that we will (weather permitting) see the first flight of the A320neo with PW1100G-JM engines on Thursday - a 1980s fuselage and wing (with 2010s "sharklets") and a 2010s engine by the way...


Airbus converting ceo to neo, Boeing looking for NG sales

This is an update to an entry I wrote earlier about Airbus overbooking A320ceo slots.

Apparently Airbus now can easily convert A320ceo orders to the A320neo, as previously Airbus overbooked the remaining A320ceo slots. At the end of July 1503 orders for the A320ceo were in the backlog (3251 for the A320neo).
I expect a few more cancellations and conversions from A320ceo to A320neo:
  • Kingfisher     67 A/C
  • Alphastream 15 A/C
  • Sri Lankan      6 A/C
  • Mexicana        4 A/C
  • Croatia            4 A/C
  • Hamburg Int.  2 A/C
  • AirAsia           3 A/C (conversion to neo)
  • Wizz             10 A/C (conversion to neo)
On the other hand, there are a few more announced orders which are not yet shown in the Airbus order book:
  • Qingdao Airlines    5 A/C
  • Zhejiang Loong    11 A/C
  • Spring                   30 A/C
  • Juneyao Airlines   20 A/C
This would lead us to net reduction of 48 orders, leaving 1455 orders for the A320ceo lines. I counted 1804 on July 31, 2013, so we have a reduction of 349 aircraft in the backlog with 494 build in these 12 months, thus having 145 net orders between July 31, 2013 and July 31, 2014 including the now-in-the-orderbook A319ceo/A321ceo for AA (and including some speculation about new orders, cancellations and conversions). Not bad for an aircraft that is going to be superseeded by a version that is 15% more fuel efficient...

With the same calculation I did last year (42 aircraft per month and 11.5 months of production per year) I get 638 deliveries until the end of October 2015, when the A320neo should go into airline service, leaving 817 A320ceo in the backlog.
At the end of December 2016 the backlog would be down by another 464 aircraft (I just saw that I made a mistake here last year), leaving 353 A320ceo in the backlog.
Building another 194 A320ceo in 2017 leaves Airbus with 159 A320ceo family aircraft in the backlog in 2018, where production of the A320ceo should end.

The situation is (still) very much different at Boeing - although Boeing always states that the B737NG is sold out.
There are 1755 open orders for the B737NG production line at the end of July 2014. I do not expect any cancellations (but there could be coming more conversions from the NG to the MAX). There are a few announced but not yet finalised NG sales:
  • Xiamen      40 A/C
  • Air China   20 A/C
  • Ruili           14 A/C
  • Yakutia      12 A/C
  • Oman Air     5 A/C
This would sum up to 1846 open orders.Considering a rate of 42 aircraft per month there will be around 1500 deliveries until August 2017, which I choose as EIS for the B737MAX, leaving around 350 B737NG's in the backlog, around 280 less than Airbus will have at EIS of the A320neo. So there are still open slots for the B737NG. How many exactly is not clear, as Boeing will change to a build rate of 47 per months in 2017 and Boeing did not indicate if some of these "extra aircraft" will be NG's.

So while Airbus can now make (some) customers happy by letting them convert A320ceo's to A320neo's, Boeing has to look hard for some more B737NG customers, while Boeing did let customers convert from NG to MAX very much earlier.

As I wrote this BOC Aviation ordered 30 B737NG (along with 50 B737MAX)...


Farnborough Preview

There are already some previews out there, for example from Leeham and airchive, so I won’t repeat all that is said there…but:

Of course the BIG question is if Airbus will launch the A330neo at the show – and not, if they will launch it or not. Even if Airbus officials always state that  a final decision has not been made – that may be true from a formal perspective, but the decision has already been made by the potential customers who would otherwise turn to Boeing, at least some of them. This would not be an option for Airbus, of course.

My guess is that Airbus will at least make an “ATO launch”, but recent stories from reuters and Bloomberg suggest that Airbus is looking for last-minute commitments from the likes of AirAsia and ALC to make a launch like we have seen it from Boeing for the B777X at the Dubai Air Show last year.

Indigo will likely go ahead with an order for another 200 A320neo’s, Bloomberg reports today. This has to be seen in the context of the forthcoming IPO and a possible future shareholder stake from Qatar Airways. Indigo would then not only grow further in the indian domestic market, but also become the feeder from the whole indian subcontinent for the Qatar Airways longhaul fleet out of Doha.
Monarch reportedly switches to Boeing – a blow to Airbus of course, but this deal is probably driven by commercial terms which do not leave a big margin for both aircraft and engine manufacturers.
There could be a number of additional orders in the narrowbody market as usual, especially on the Airbus side. Boeing could announce a number of undisclosed customers for the B737MAX.
Not sure if Bombardier can announce something. Monarch adding the CSeries to the larger B737MAX (I expect only the -8 and -9 here) would make sense, but Scott Hamilton is not very optimistic on that one.

I refer to Leeham and airchive here…

I expect Embraer to announce one or more orders for the E2 family, maybe a second lessor. Maybe also some E1 sales…
ATR will for sure have some sales for the ATR72-600. Bombardier always finds it hard to be able to announce during a show due to strict disclosure rules in Canada.
I do not expect anything from Mitsubishi for the MRJ…

Narrowbody engines
This is where we can expect large deals to be announced. American Airlines choosing the LEAP-1A already leaked. A logical choice as GE, CFM and GECAS have great leverage to sweeten the deal with non-neo issues.

Also we can expect that easyjet announced their choice of engines for the A320neo fleet. Any other choice than CFM would be a surprise, for the same reasons as for the AA decision. The same could be said for Lion Air, although there were rumours earlier they would opt for the PW1100G-JM. There are a number of other open A320neo decisions where the direction is not so clear (VivaAerobus, Philippine Airlines, Interjet, Transaero, China Eastern, China Southern, …)

Widebody Engines
The RR Trent1000 to be the choice for the A330neo  now seems to be a given. GE could make some deals with the GE9X of course, RR with the A350 if orders materialize for the respective aircraft. Other than that nothing to exciting here.
The devil is in the detail - it does not look too boring neither too exciting as yet. But there could be "unknown unknowns"...