GE and the Geared Turbofan

There was quite a lot of hype in the last days around a story, first reported by Bloomberg, saying that GE talked with Airbus about a new engine for “a narrow-body jetliner in development”. In the article (and many that followed that first story) there is a lot of speculation about the aircraft: If it would be a successor of today's A320, a future stretched variant of the A220 or if that aircraft would in the end be the ZERO E (E for Emissions) aircraft announced by Airbus in September and the engine GE and Airbus discuss here would be an engine that would be used for that aircraft until a ZERO E engine (technology) would be available.

To make it short: this last consideration is – sorry to say it that way – bullshit! Whatever the source of energy of the future ZERO E aircraft would be – hydrogen or electricity comes to mind- the aircraft has to look very different from the design of a jet fuel powered aircraft and it would make no sense at all to hang a Geared Turbofan on an aircraft designed and optimized for zero emissions.

The fact that GE and Airbus talk about a new narrowbody is not a big story in the first place, as there are always discussions between airframers and engine companies about all kinds of possible future projects. But Bloomberg made a lot of noise due to the fact, that the design proposed by GE would be a geared turbofan, which is the engine design that today only Pratt & Whitney uses. GE always more or less dismissed the geared design in public because of the added complexity of the gear. Rolls Royce began developing their own geared engine concept called Ultrafan a few years ago.

So does GE not believe in the conventional turbofan anymore?

Not necessarily: believe it or not, but it is not the first time that GE proposes a geared design to an aircraft manufacturer. For the B777X, today's B777-9, GE also pitched a geared design towards Boeing, as did P&W at that time (I believe RR proposed a 3 spool design). But obviously Boeing went down the low-risk path of the GE9X engine, an evolution of the GE90-115B and the GENx engines, although the geared engines would have had a better fuel burn.

For the now (forever?) dormant NMA, Boeings reference engine was a geared turbofan. This makes sense, as at least in the beginning two of the three possible engine provider offered a geared design (P&W and RR), so we can only guess that GE (or CFM) also offered both variants (geared and non-geared) to Boeing. Later RR went out of the discussions as the aimed EIS timing was too early for the UltraFan.

So when today GE talks with Airbus about a geared engine, there is nothing sensational in there. Most likely the geared engine is just one out of two or more designs. And it most likely not more than a paper study, in which P&W and RR are involved as well. It is not more than the usual business of the future concept groups of all parties involved.

So do not expect an announcement of a new aircraft in the near future. Even a stretched A220 (-500) seems not to be on the horizon too soon...

Next (new) airplanes

After NMA is obviously no more, some people seem to believe, that Boeing could instead bring a refreshed B757 or B767 to market.

Is that viable? No, I would say, at least not for passenger traffic!

Both aircraft are late 1970’s aircraft, thus about ten years older than the A320ceo. Both were the first narrow- and widebodies with a two-crew-glass-cockpit.

But: the design of the airframe and the wing keep to be from these days, aside from getting winglets, saving up to 4% fuel burn.

So a new wing, along with the new engines, would be inevitable. Along with that goes a new center wing box. That means typically at least 50% of the development costs of a complete new aircraft.

But it does not stop here. A new cockpit with all the technology of B787 or B777X would be needed to make these airplanes attractive to airlines.

Now to the engines: for the B767 GEnx engines would be the likely candidate, and here the -2B version, as it has the right thrust and also a bleed air system. The GEnx though is an engine which was designed in the early 2000’s. The concept would me more than 20 years old if Boeing would decide to start development now with an EIS in 4 to 5 years. The basic aircraft concept would then be 50 years old.

The same is basically true for the B757: with the difference that there would not be an “off the shelf” engine with the right thrust available. But would any engine company spend $1bn for a brand new engine for a 50 year old fuselage? CFM/GE and PWA for sure not, as they have their engines in place on the A321XLR. So only RR could have an interest, but with todays news that they are laying off some 8000 people and delaying the development of their Ultra Fan this is more than questionable. In fact, I see RR in danger as they are so heavily exposed to the widebody market, which, in the opinion of all experts, will be the last market segment to recover.

So there won’t be a new aircraft from Boeing for the time being. CEO Dave Calhoun though says that the “true differentiator” of Boeing’s next aircraft will be “the way we manufacture and the way we engineer, as opposed to the… design of the airplane itself” (quote from the Flightglobal article). What does that mean? As I understand it: the B737MAX will stay the B737MAX, Boeing will (just) look into the cost of production. Well, hopefully they will get it right…

What does that mean for Airbus? A great opportunity, if they are bold and can get money in a similar manner as Boeing raised $25bn on the capital market. If Airbus can raise enough money with a lower yield than Boeing did, Airbus could use that money to invest in the so-called A320neo++, where the A320neo and the A321neo will get a new and larger composite wing and a new cockpit and both would be stretched to a “A320.5” (between todays A320 and A321) and a A322. Then Airbus would also need to develop the A220-500 and would have the perfect product line for the rest of the century and the early 2030’s.

Boeing meanwhile is stuck with the problems of the B737MAX:

1.     The grounded fleet at the airline customers has to be upgraded.

2.     The undelivered fleet has to be upgraded and to be delivered.

3.     Reacting to the potential A320neo++ would lead to the B737MAX being a non-seller

4.     The MAX is MAXed out: without a new wing, a complete new, longer undercarriage and larger bypass engines (from the A320neo) the B737MAX could not compete against the A320neo++. But would that make sense? No, then a complete new aircraft would be needed. Means another $15bn to be found somewhere, meanwhile back the $25bn bonds. Not easy…

So far for my theory…

How Corona could change the future of Aviation

How perfect aviation was just weeks before: the new corona virus (SARS COV-2) seemed to be contained to be local chinese problem only, global growth seemed to be unaffected. If the virus could have a negative impact, then it would be just a very temporary dip like we saw when SARS (SARS COV-1) appeared in 2003. Then, growth rates quickly came back to what they have been before.

For now, we should not count that to happen again after worldwide infections with the virus have dropped significantly. The timing of this, of course, is the first open question: some state leaders seem to think they can beat the virus by ignoring it and tell their people they should not be cutie-pies just because they do not get enough ventilators…

But let us think what will happen after the crisis – whenever that may be:

A lot of airlines will cease operations indefinitely – not just temporarily as just right now. Even if many governments will throw a lot of money onto their national airlines, I think it is fair to assume that many will not survive in the long term, just because they lost too much money meanwhile.

But what is more important is what CEO’s of large and strong airlines say these days. CEO’s of airlines which should survive the crisis. Let’s take a look at Lufthansa, Delta Air Lines and United.

Lufthansa’s Carsten Spohr said these days that after the crisis his airlines group will not see the scale as it had before. Spohr is sure that after the corona crisis the whole aviation industry will be a different one: “We have a smaller Lufthansa group ahead of us.”

As for Delta, CFO Paul Jacobson already said: “We’re going to be smaller coming out of this” and Henry Harteveldt, president and founder of Atmosphere Research said he would not be surprised if that will be also true for United and American. In fact, also United CEO Oscar Munoz and president Scott Kirby warned in a letter to employees, that “our airline and our workforce will have to be smaller than it is today.”

If this will be true, and not just for these particular carriers but for the whole industry around the globe: what does it mean?

First: less airplanes in the sky. The question is then, relative to today, where airlines parked up to 95% of their fleet, which airplanes they will fly then. Will they put their older aircraft out of storage again or will they grow only modestly, getting only the younger aircraft out of storage and then grow slowly with deliveries of new aircraft? That depends on if they can pay for new aircraft and if the aircraft they own today are owned by themselves.

Airlines with better financials may take new aircraft and benefit from lower operating and maintenance costs. On the other hand, if they own their aircraft without any debt on them and oil prices are staying low, it could be more economical for some time to put at least some of the MD80, B757 and B767 out of storage again.

Why is that an important question?

First, it is important for the fight against global warming – at least politically. As most sectors were able to cut their CO₂ output in the last years, aviation was not. In fact, the goal of climate neutral growth from this year on was always questionable at best. Now, with the corona crisis, CO₂ output this year will fall compared to last year for sure. It will probably take some years to reach the level of 2019 again. And it will take longer, the more of the older jets now in storage will be replaced with A350, B787, B777-9, A320neo, B737MAX, A220 and the likes.

But the question is also important for the ones like Airbus and Boeing of course. If airlines let their old aircraft in the desert, aircraft production will soar again as new aircraft are needed for the growth after the crisis. But if older aircraft be flown again, we probably will never see the rates of 60 aircraft a month for the A320neo or B737MAX.

For the engine industry, it would be more of a financial problem when all the old(er) aircraft will be scrapped. Too many engines would then be available for part-out, flooding the aftermarket with used parts and destroying the then anyway smaller, but today very profitable business with spare parts.

Sales of the engine industry would then be heavily torted to the new engine business, which is not profitable at best, not to say loss-making.

So the profitability of the engine industry would be hurt badly -  or the industry would have to change their business model by shifting profits from the aftermarket business to the new engine sales. Of course that could only happen if all engine makers would agree to that and if airlines up to a certain point as well.

In case the profitability of the engine makers is hurt too much, they would not be able for adequate research for the next generation of engines that would be needed for an A320neo or B737MAX successor. The corona crisis could have shifted the arrival of these new aircraft the right for a few years now anyway as also Airbus and Boeing will probably have to scale back their R&D costs in the next few years.

So a good thing - a more modern and CO₂ efficient fleet in the short and mid term - could lead to a bad thing in the more distant future: later introduction of breakthrough technologies.