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.

Fifth Season Time in Toulouse

The end of the year is near and so it is fifth season time again for John Leahy. Tomorrow we will see if he can sell some 60-90 aircraft to Air Canada, believed to be A320neo and A321neo's (or B737MAX-8/-9 if his counterparts at Boeing succeed).
But there are quite some more sales to complete this year and chances are good that Leahy will top the old record from 2011, when the A320neo had it's first full year of sales.
So what can we expect apart from Air Canada? Another awaited order for narrowbodies could come from Monarch. Both Air Canada and Monarch could also put a CSeries order in their shopping cart,

A350 overweight?

Airbus quietly unveiled new payload-range data for the three A350 models on it's website.
The A350-900 now seats 315 (was 314), but flies 350nm less: 7,750nm.
The A350-800 now seats 276 (was 270), but flies 250nm less: 8,250nm
The A350-1000 now seats 369 (was 350), but flies 400nm less: 8,000nm

As this comes about 5 months after first flight I guess it has something to do with the initial performance of the aircraft. What it is exactly we cannot know. It could be:

• higher than anticipated SFC of the Trent XWB engines
• higher aircraft weight which now became clear cannot be brought down
• aerodynamic inefficiencies

What strikes my eyes that the one more passenger in the A350-900 (for whom we suggest a generous extra weight of 300lbs including seat etc.) costs more range than the six passengers more in the -800. And the 19 extra passengers cost only 50nm more than the one passenger in the -900. Although the -1000 is structural different than the -800 and the -900 and the engines are different too, this is not really conclusive.

I guess we can expect some argueing duels between John Leahy and Randy Tinseth over these new numbers in Dubai next week. Randy will not miss out to bash the A350 for ranges that are (nominally) again not meeting Emirates range expectations (DXB-LAX) whereas "his" B777-9 will do so (although I would expect Emirates to fly these long routes with a 3 class layout with less than 350 passengers in a A350-1000). And John Leahy will try and find a way to spin something positive around these numbers...

UPDATE: in fact these numbrs are NOT NEW and where already shown in 2011, long before the first flight and probably also the SFC of the certificated Trent XWB became clear.

Pre Paris Air Show tidbits

The Air Show is only three days away now and we have the first flight of the A350. So, no wonder that we see a lot of news stories coming out. Here are some of them:

1. Enders expects orders for "hundreds" of Airbus aicraft: As I wrote earlier I always thought that John Leahy and Tom Enders were overly pessimistic with their forecast of "only" 700 orders, later expecting 700-750 orders, later upping that number to more than 800. At the end of May there were 517 net and 493 net orders. Add 102 orders for Lufthansa (30 A320ceo, 70 A320neo and 2 A380), then add Air France for 25 A350-900, add 100 A320 for Air China and Shenzen, another 18 A330 and 42 A320 for CASC and you already have 804 net orders - all these orders are announced. Then add the "hundreds" we will see next week and Airbus will easily have more than 1,000 net orders for the year with the Dubai Air Show still to come...

2. Airbus is now (again) the front runner at easyjet. We will see how that campaign ends up. I guess it is not over yet and I do not expect the deal to be finished during the Paris Air Show. Profit margins for the winning manufacturers (aircraft and engines) will probably be dismal.

3. Not unexpected: Boeing will launch the B787-10 at PAS13. This was in the "rumour mill" for a long time now. Boeing will kick-start the B787-10 with a bunch of orders from Singapore Airlines (which already came forward), United, ALC and British Airways. I could imagine one or two other "surprise" customers.

4. Rany Tinseth thinks that this will be the Show of the Widebodies. Hmm, read that somewhere before I think. He should definitely be right about that!

Paris Air Show 2013 - The Widebody Show

After the 2011 edition of the Paris Air Show was dominated by the A320neo, this year seems to be the show of the Widebodies. The usual suspects as Emirates and Qatar will surely play a major role here, as we can read here (as for Qatar) and here (as for Emirates). Although the B777X is not mentioned in the first article we can be sure that Qatar will also be one of the first customers for the then largest twin. Probably not only the B777X will get it's first orders but also the B787-10 will see a formal launch with a first wave of orders. Airbus, of course, will try not to stand by and have it's own order book filled, mainly that of the A350.
The future of the A380 could play a role in conjunction with the launch of the B777X as the seat costs of the double decker will come under pressure once the B777-9 will enter service. So we might hear what Airbus has on it's plate for 2020 and beyond, as also Ben Sandilands suggests - although he thinks that might need a little bit more time.

A new chance for the A330neo?

Qatar Airways ever communicating Akbar Al Baker yesterday told the press that Airbus would drop the A350-800. Airbus instantly denied, so nobody can tell for sure what is the fate of the smallest model of the A350 family.

Farnborough Preview

We are only days away from this years largest air show. There are quite a few previews out there, the most extensive I read comes from Scott Hamilton.
First at all - for me the SST mentioned in Scott's post is nothing more than a marketimg gag - at least for the flying public. The program could serve Boeing as a technology platform for military vehicles in the future, but I doubt that we will ever see a thing like that one shown in the post flying (in full scale at least).
But what about the rest?

A350-1000 with more range - Update

Flightglobal has a new take on what is going on with the A350-1000. Contrary to Scott Hamilton, Max Kingsley-Jones thinks that the wing would be part of the design change, thus getting larger. This could indicate two things:
1. The Thrust/Weight-Ratio could get down without sacrificing runway performance as the larger wing would provide more lift. In other words, the MTOW could be lifted more than the ~5% gain in takeoff thrust, enabling the aircraft to carry more payload (especially cargo) over the reportedly new design range of 8500nm.
2. The investment for a larger wing and a "new" engine would make more sense, if another type would be added to the A350 family - call it the A350-1100 for now. With a further stretch of 4m it would have a fuselage length of roughly 80m, representing the ultimate stretch and would be a real B777-300ER competitor in terms of passenger capacity. The question then only is, if the range of the -1100 would be limited to 8000nm, comparable to the B777-300ER range, or if the -1100 would also get a range suitable for LAX-DXB (I now think that the 8500nm should work in >90% of the time for that route). If so, the "new" engine should really be a "new" engine - not just with an enlarged core, but also with a larger fan, as the thrust requirement would be more in the range of 105klbf. That would have implications to the basic design of the aircraft, especially the length of the undercarriage.

So Airbus could end up with the sub-families fo the A350 - the -900 and the -800 on the lower end and the -1000 and the -1100 on the upper end, very much comparable with the A340.

But again - until June 18 all is about speculation! But that's the fun with it...

The Lufthansa Order and what it might tell us

Yesterday, Lufthansa ordered 48 aircraft to be delivered from 2012: 32 A320 family aircraft, eight A330-300 and 8 E195. When I first read the news, I wondered what that order means, when there are more efficient aircraft available in the next years (think of 787 vs. A330, CS100/300 vs. E195 or, further out, A320NEO  vs. A320(current).
To clarify the situation I would like to direct you to Jens Flottau's article in the Aviation Week:
Most of the A320 are for replacement of older A320 or the even older B737 (-300's and -500's). Swiss will get A320's and A321's, but no A319's - that makes sense, as the CS300 would be clearly more efficent. Swiss (via LH) only has ordered 30 CS100 so far, but there are 30 more options which could be converted to CS300 if needed.
So I don't think right now that the A320 order is a vote against the NEO, but it probably all depends on what Boeing does: if they would come up with a 737 replacement by 2020/21, I see LH switching from A. to B. for their (6 abreast) narrowbody fleet in the long run. The CSeries should have it's role also, not only at Swiss, but also as a Avro replacement at Brussels, maybe at Austrian, LH Italia - and who knows what happens to SAS - they would be happy to find a home in the LH Group and expressed interest in the CSeries earlier.
The question why Austrian does not get any new aircraft is sufficiently answered in the article.
Another question that struck me, is: why A330-300's! Why do they not order the B787 or the A350??? Does LH (aka Nico Buchholz) know something about these two natural candidates for A330 replacement we still do not know? Any further (and then probably significant) delay of the B787? Problems in the A350 development program? Fact is that the flight test program of the B787 has slowed down in the last two weeks (as well as the B747-8 flight tests did). Aircraft number 6 is also delayed further.
I guess we will have to wait until the Boeing Q3 earnings call until we hear what is going on there. Until then, have fun with wild guessing...