A220 Stretch - to launch or not to launch...

The speculations about the official launch of a stretched A220 comes up again at regular intervals. Airbus position is that it is not a question if it will be launched bot only when…

Next spring at the latest, in the run-up to the Paris Air Show, speculation about a launch at the show will be rampant again. So let's start early, say now... what are the reasons for or against a stretched A220, what options are there in terms of engines and what could that mean for the A320neo and B737MAX successors?

To launch or not to launch?

What speaks for a stretched A220? Let's start with what no longer speaks against it: the A320neo. In the past, the popularity, the number of open orders and the profitability (for Airbus) for the A320neo were cited as the main economic obstacles to the launch of the A320neo. As soon as the A220 Stretch is announced, customers would cancel the A320neo and order the A220 instead, which is significantly more expensive to manufacture (today). However, if you look at Airbus' current order backlog, over 70% of the open orders for the A320 family are for the A321neo. The A321neo accounts for 87% of orders from 2024. The importance of the A320neo for Airbus has declined significantly in recent years and the A321neo is even more profitable to sell than the A320neo.

The next reason in favor of a launch could just as well be one against it: Boeing's situation! Boeing is still busy getting the B737MAX-7 and especially the Boeing 737MAX-10 certified by the FAA, EASA, etc. - and also the B777-9, whose EIS has just been postponed again. It is questionable whether Boeing can even provide enough resources for the certification issues while at the same time having to deal with general quality issues and now also with the strike of its unionized employees (a new offer from Boeing is out and the vote is expected in the coming week). A ramp-up of B737MAX-8 and -9 production is currently not in sight and the B787 has its own problems. Boeing will therefore lack cash flow in the next few years and the company must now urgently mobilize money on the capital market. Boeing bonds could soon have junk status. Two very different conclusions could be drawn from this situation:

a) Pro: Airbus is launching the stretched A220 to put the B737MAX-8 under even more pressure. This would force Boeing, if they were financially able to do so, to launch a successor to the B737MAX family earlier than planned. Currently, the optimal time window for a launch would be after the end of the analysis of the X-66 flights, which are currently scheduled to launch in 2028. After the first series of flights, for which the GTF engine of the A220 and Embraer E2 will power the aircraft, the CFM RISE engine may also be tested with the X-66. Boeing would then have a real comparison of the installation effects. But not before 2030! An early start to the development of a B737MAX successor by Airbus would deprive Boeing of many options, the solution would probably be a traditional "tube-and-wing" aircraft with an advanced LEAP engine and/or a PWA GTF or Rolls Royce Ultrafan variant. For Airbus, this would have the advantage of being able to wait a few years, analyze the Boeing design and meanwhile evaluate the CFM RISE engine in flight tests earlier (currently planned from 2026). This would give Airbus and the engine manufacturers more time to prepare additional technology. However, this is exactly where the first sticking point comes in: are the engine manufacturers prepared to develop two different engines in a relatively short period of time? Do they have the resources for this? Do they see a business case? It could end up with the engine manufacturers demanding a "single source" solution from Boeing, because Boeing's market share compared to Airbus would probably continue to decline.

b) Contra: from a market share perspective, Airbus has no reason to invest in the development of an A220 Stretch. The market share of the A320neo has grown steadily compared to the B737MAX in recent years, and Boeing can not and does not want to afford to launch a successor. Airbus can therefore sit back, relax and wait until Boeing takes the first step, perhaps in the early 2030s, and counter it after carefully analyzing the Boeing design.

These two scenarios have very different effects on the engine manufacturers.

In scenario a) the most likely engine variant is a further development of the PW1500G engine, similar to the further development of the PW1100G engine into the GTF Advantage. CFM, on the other hand, would probably have to make a completely new development for the A220 Stretch, as the LEAP-1B is significantly heavier and has a worse SFC than the PW1500G. It would be difficult to build a sound business case here, especially as some of the sales for the A220 Stretch would be no extra sales, but just drawn from the B737MAX.

What consequences would a A220 Stretch launch have for Airbus? I think that it will not be a "simple stretch": firstly, Airbus will use the opportunity to integrate further detailed improvements, e.g. further developed winglets, which can then also be used on the A220-100 and -300. But I think the question of whether the way the aircraft is produced will change is much more important. At present, it is not yet clear how a production rate of 10 aircraft per month could be achieved in Mirabel. The so-called pre FAL, which Airbus built in Mirabel after taking over the program based on the A320 line in Hamburg, has not led to a significant increase in production even two years later; currently only 4-5 aircraft per month are being started for assembly.

If demand for the A320neo does indeed fall further with the release of the A220 Stretch, it should be possible, for example, to convert one of the existing A320 lines in Hamburg, Toulouse or Mobile to the A220 and at the same time optimize the entire production process. This would also enhance profitability of the A220 program.

What about the consequences for Boeing? This depends on the exact positioning of the A220 Stretch: if it is placed close enough to the capacity of the B737MAX-8, Boeing would have to react as described under a). As described, this would come too early for the CFM RISE, the aircraft would probably (obviously) get a second generation LEAP engine and possibly a second option. But here lies the problem: would Pratt & Whitney or Rolls Royce be prepared to invest in a completely new development, knowing that a few years later Airbus would demand an engine that is significantly better in response, and perhaps if development has progressed far enough by then? This makes it clear that Boeing is in a dilemma.

But there could be a solution that - ironically - was close to completion a few years ago and was then shortsightedly discarded: this solution would be Embraer. A few days ago, Embraer CEO Francisco Gomes Neto confirmed that Embraer is (once again) considering developing a "big narrowbody". A new attempt at a merger between the commercial aircraft division of Embraer and BCA would have the advantage for Boeing that it would be able to face a competitor to the potential A220 Stretch without Boeing having to decide on the design and technology of the real successor to the B737MAX family. An Embraer/BCA narrowbody could initially cover the field above the E195E2 up to the (then) A220 Stretch. This would keep the market share large enough from Boeing's point of view.

Scenario b) is much easier, especially for the engine manufacturers. All have enough time to work on the next generation of aircraft and engines. The option for an Embraer/Boeing Joint Venture would be there as well. But that would most likely concentrate on the lower end of the narrowbodies and then maybe “force” Airbus t launch the A220 Stretch.

Speculation of course, all just speculation... but all major suppliers, but above all the engine manufacturers, must or should deal with all variants and prepare for them.

The Paris Air Show 2025 begins on Monday, June 16, 2025, and we will know more about how the story (of the narrowbodies) continues by Friday, June 20, 2025 at the latest.

Boeing's big gamble

A recent article by Bloomberg about the new composite wing that could replace the current wing on the A320neo, a project called “The Wing of Tomorrow” by Airbus, spurred some discussions about the future Airbus narrowbody product line and how Boeing would/could react.

The subject, as Scott Hamilton writes, is not new at all. I heard about it in 2013 for the first time. Airbus at that time thought that Bombardier would launch a CS500 (today discussed as the A220-500) and thought that the CS300 was about 5% better in economics than even advertised by Bombardier to customers. This gives us a first indication of how good an A220-500 could be, as the A220-300 has at least the same costs per seat than the A320neo, if not better. A stretched aircraft always tends to have better seat costs than the original one, so the A220-500 has better seat mile costs than the A320neo “by definition”.

If the A220-500 it would be an A320neo and B737-8 killer, as Scott Hamilton thinks, is another question though and depends on how the A220-500 exactly would look like and what the mission is an airline is looking for.

Start with the current payload-range diagrams of the A320neo and the A220-300.

Looking at the payload-range diagram we see that indeed with 165 x 220lbs per passenger = 33klbs of payload the range is in the 3400nm range.

The payload-range diagram of the A220-300 is not yet updated by Airbus (at least not for the “flying public”) and still shows around 3100nm range with 140 passengers and 149000lbf MTOW. If we believe in the Airbus claim that with the new MTOW of 156000lb range would be 3550nm we get the new range-payload line approximately as a parallel line to the old one. Now let us seat 165 in that aircraft (knowing that it would not work of course) and we see that range would fall to around 3000nm by the addition of the extra 25 passengers of payload.

To seat these 25 passenger we would need to stretch the aircraft by five rows of about 4m of 13ft. This is about the same difference in length than between the A220-100 and the A220-300.

For simplicity, let us consider that the difference in OEW between the A220-300 and a potential A220-500 with unchanged MTOW would be same as the difference between the OEW of the A22-100 and the A220-300: 4100lb. Then we would get a range of the stretched A220-500 aircraft of around 2500nm.

On one hand, this is enough for probably around 95% of all flight a A320neo of a B737-8 is used for today. On the other hand, flexibility is key for many airlines, so the limited range of an A220-500 would be a problem for many airlines.

Now we can increase the MTOW of the A220-500 to increase range.

Start with a comparison of the wing loading: the A220 wing has 112.3 square meter, the A320neo 122.6. To get to same wing loading we could increase the MTOW of the A220-500 by about 3500lb. This would increase the range by approximately 300nm to about 2800nm. The original CS300 was advertised with this range. With the same wing loading and the same generation of engines, especially with a bypass ratio that is in the same range, runway characteristics should be comparable as well then.

So would the A220-500 be a A320neo and B737-8 killer? If you definitely do not need more range than 2800nm it could be.

For Airbus, with their “Wing of Tomorrow”, this would not be such a big problem. They could do the A320.5neo++ (or whatever it will be called). For Boeing, not having a competitive product against the A220-100 and -300 to begin with, the A220-500, together with a A320.5, could turn into a bigger problem. Both aircraft would squeeze the B737-8 from both above and below, the A320.5 with better range and economics and the A220-500 with dramatically better economics.

But the ball is in Boeings court. As it looks, they have to move first, either with an aircraft that aims at the so called Middle of the Market, that is now captured by the A321XLR, but leaving the B737-8 alone. Or by replacing the MAX family soon, which could counter an A220-500 on the low end but leaving the A321XLR and even more a potential A322 alone on the playground.

Canceling the joint venture with Embraer could have been a big failure going forward, as “Boeing Brazil” could have worked on the lower end of the narrowbody product line.

Disclaimer: these thoughts are just easy considerations without going through all the (engineering) steps necessary. But it gives us a hint where the different aircraft are relative to each other.

A small review of 2019 - and outlook for 2020

Looking back at what happened at Civil Aviation in 2019 first of all there are two things belonging to Boeing: most important of course the grounding of the B737MAX. A lot was written about it, so I won't do... at least it was good for every lessor who had a B737NG or an A320 coming off-lease, making a good lease rate for the next lease. But bad for all the airlines which now has to pay the higher lease rates...
Boeing now stops B737MAX production for some weeks or months, also the suppliers will at least slow their output. That could give some of them breathing room -  at least all the casting houses for turbine blades were running over capacity...
The second "important thing" from Boeing did not happen - at least so far: the NMA. Who knows if Boeing would have launched it if the B737MAX did not happen?
Airbus meanwhile launched the A321XLR and now has a few hundred orders for it, some of them maybe only because NMA was not launched. A320neo family production is still a problem, this time not because of missing engines, but because of missing cabins. Airbus maybe should have launched a new-build freighter version earlier...😂
Production of the A220 though went better than predicted by Airbus. According to the Airbus Family Flight Page 44 aircraft were delivered so far and 48 had a first flight. I guess the four remaining aircraft will be delivered until the end of the year.That would be three more deliveries than anticipated and about 45% more than in 2018 (33 deliveries). A welcome break from Bombardiers policy to forecast more deliveries than actually were delivered.
But with the recent announcement from Airbus that building the so-called "pre FAL" I doubt that out of Mirabel there will be a big jump in delivery numbers out of Mirabel in 2020. Airbus made some progress in completing the aircraft, building more capacity in the "back part" of the assembly process. But as long as there is no capacity increase by building the "pre FAL", the input of new aircraft at the "front part" cannot be increased very much.
Another six aircraft for Delta and one for Jetblue should be delivered from Mobile. I wait to see the combined delivery goal from Airbus...
A little bit of a disappointment is the Embraer E2 Family: deliveries for the E190E2 and the E195E2 are still below 20! I doubt that Azul will get six E195E2 until the end of the year, so far they got four. Also Helvetic only got two of their anticipated four E190E2, with the second aircraft (HB-AZB) reaching Zurich only yesterday.
At least Embraer managed to get the E175E2 in the air before the end of the year. But without a customer and with no changes in the US Scope Clauses in sight, where is the program heading to?
Talking about orders, at the beginning of the year, John Slattery promised that 2019 would be the year of the big orders for the E2. Sure the order from KLM is good for the program but not  really a new order as they take the aircraft from existing lessor orders.

Slattery also promised large orders for 2018. Maybe we have to wait until the merger with Boeing is finalized, but there are two questions to this theory:
1. When will the merger be finalized: the EU is holding up the process and that might be e political response to the U.S. tariffs against Airbus.
2. Will Boeing have any priorities to sell the E175E2. They have to rebuild trust in their own bread-and-butter product, bring the 777-9 into the air and through flight testing, maybe launch, market and sell NMA...

Spacejet... I don't know. FTV10 is still not in the air and this is the aircraft which MITAC needs for certification flights. The main problem will be to build trust they can manage to build the M100, on paper a very good aircraft...

So far, so good! I know, this review and outlook is incomplete, but these were the topics that came through my head this morning...

I wish everyone (who wants one) a Happy Christmas!
And really everyone a peaceful 2020 - the world needs it!

Will the "nuclear deal" lead to higher narrowbody production rates?

Now that obviously the sanctions on Iran will be lifted in the near future after the "nuclear deal" was reached, both Airbus and Boeing will have no problem in finding buyers for their last-of-the-line A320ceo and B737NG. Airbus is overbooked anyway but could afford to allow customers who want to do so to delay deliveries and to switch to the A320neo. Boeing will find Iranian airlines willing to take B737NG's, as there are still delivery slots open in 2017 and 2018 and maybe in 2019.
The real question though is if the pressure to go to even higher rates than already announced (52 for the B737NG/MAX in 2018 and 50 for the A320ceo/neo in 2017) will now lead to quick decisions at both Airbus and Boeing.
But also Bombardier and of course Embraer could benefit from the accord: Bombardier could especially find customers for the CSeries and Embraer could sell more of their E1 line to bridge production to the E2.
Boeing also might sell some B777's to bridge their production gap between the B777-300ER/B777F and the B777-X.

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:

A330neo

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.

Narrowbodies

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.

Widebodies

I refer to Leeham and airchive here…

Regionals

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"...

Transition times...

The next years it is all about transitioning! Well, I could divagate into what "transitioning" means for every one of us and if the whole world and the whole universe is transitioning from one state into the next every second...
No, it's only about aircraft programs this time. But there will be so much transitioning that one has to keep the real overview about what is happening.
First, there is the transition from the A320ceo to the A320neo. Aside from a recent hiccup in engine testing with an engine (PW1500G) very similar to the launch engine (PW1100G) for the A320neo there is no real threat for a smooth transition in production. The A320ceo is effectively sold out. At the end of April there were 1555 A320ceo family aircraft in the backlog. That should be enough to cover the outgoing production until 2018.
It is a little bit different for the B737NG and the transition to the B737MAX. Although officials from Boeing keep saying that the B737NG is sold out as well. But at the end of April there were 1791 copies in the books and Boeing's B737MAX comes almost two years later than the A320neo. But the difference of 240 aircraft in the backlog does not provide almost two additional years of production. So Boeing must have sold an additional 650 or so B737NG to cover production until full transition to the B737MAX.
Next is the B777: there were 286 open orders in the books at the end of April, covering 35 months of production at the current rate of 8.3 aircraft/month. This gets Being into 2017, but the B777X has an EIS of late 2019. A two year gap, so a rate cut is very likely, as Scott Hamilton reported.
Then there is the widely expected launch of the A330neo. There were 260 A330 series aircraft in the backlog at the end of April, lasting 26 months at the current rate of 10/month until mid 2016. The A330neo is expected to enter airline service in late 2017 or early 2018, so a rate cut is also almost a given here.
To be clear: both the B777 and the A330 will have a few further sales, but it won't be enough to bridge production with the current output rates.
Did I forget something? Yes - Embraer!
At the end of Q1 2014 there were 264 EJets in the backlog. Subtract 24 from Jetblue which will not be taken (at least not in the E1 version) and 7 for Nasair (they recently got rid of all their EJets and "transition" to an all Airbus fleet), so that is 233. Production is about 90 aircraft per year - that gets Embraer into the last quarter of 2016. I expect some options drawn for additional E175's for the three big american airlines (AA, DL and UA). But will these get them to a smooth transition to the E2 series jets, which should have an EIS in 2018 (E190E2), 2019 (E195) and 2020 (E175). I doubt that - Embraer should hurry up...

„Premature“ engine upgrades

In the context of my last post I wondered why MTU now starts talking about an upgraded GTF to be delivered in 2019. We are one and a half years away from EIS of the PW1100G on the A320neo and the engine is  - well – not selling bad. Why announcing an upgrade now? To enhance SFC by 3% does not sound cheap - GE and RR needed two improvement packages to bring the engines for the B787 to SFC spevc level.
Furthermore MTU COO Rainer Martens told the press that these enhancements could also be implemented into the other PW1000G family members (PW1200G/PW1700G for MRJ/E175E2 and PW1500G/PW1900G for CSeries/E190E2&E195E2). So we can be sure that all aircraft OEM’s will sooner or later ask for the upgrades, just a couple of years after EIS of their respective aircraft – remember that the E175E2 should have an EIS in 2020, AFTER the PW1100G is available with the upgrade. Sounds like all the development engineers will have secure jobs at P&W, MTU, JAEC and the other PW1000G partners for the years to come. Good for them, bad for the "bean counters" in the companies and the financial breakeven of the engine programs.
For Airbus, the revelation has probably a good and a bad side. The good side is that the A320neo will enhance the competitive position against the B737MAX (and maybe later a CS500), but also the A319neo could be in a better position against the CS300. On the other side, remaining delivery positions for the A320neo in 2018 will be not that easy to fill without giving another discount for not getting the upgrade.

The B757 successor discussion

Yesterday MTU’s COO Rainer Martens revealed during the annual results presentation that there is a plan to upgrade the PW1100G engine for the A320neo with another 3% SFC jump by 2019. On a side note, as the turbo machinery of the PW1100G and the PW1400G are identical,  the MS-21 will also benefit from that as I think that P&W and their partners will not start building  two different engines.

But what does that mean in a broader context?

Firstly, we can be very sure that a similar PIP (Performance Improvement Package) will also be worked out for the LEAP-1A (and the LEAP-1C destined for the COMAC C919, as this engine has the same turbo machinery as well). Another report on a german website cites MTU’s Martens that the 3% improvement are agreed with Airbus so we expect that there is a corresponding  agreement between Airbus and CFM to lower SFC around 2019/20. As the GE9X goes into service by that time frame we can expect a lot of technology transfer from the GE9X to the LEAP-1A – and subsequently to the LEAP-1B for the B737MAX.

Secondly, this makes the business case for any A320neo and B737MAX successor harder. This is why I do not believe in a B757 successor in the time frame that was discussed by Scott Hamilton and others lately. At least not in the sense of a purpose build aircraft. Here is why:

·         The 3% lower SFC for the A321neo (and probably sooner or later also for the B737MAX-9) leads to 100+nm more range, bringing these two aircraft even closer to the capabilities of the B757 today.

·         As of today the A321ceo can do about 95% of all routes flown by the B757 today. And the A321neo can only NOT do five city pairs flown by the B757 today (I go that verbally from Airbus). 

Add the 100 extra miles coming out of the engine improvement and what is left? Maybe three routes, maybe four routes, maybe still all five. Add some improvements to the airframe and what is left then…?

I am  sure there is no business case left then for building a standalone aircraft with the capabilities of the B757. But also as part of a new family of narrowbodies, aka the A30X and the B797, there is no real need to compromise the efficiency of the whole family with a wing that is large enough to cover distances more than what the A320neo/B737MAX families will do. Otherwise Airbus and Boeing could lose market share against a Bombardier CS500 and a forthcoming Embraer small narrowbody  which are designed for ranges less than 3000nm.

But I do not see these new breeds coming a of 2025 as James N. Krebs postulated in this very interesting guest column at Leeham News. But if we see a further 3% improvement from the engines at the end of the decade, how should there be another jump of 20% in fuel burn in 2025? The technology for an aircraft with an EIS must be defined by 2018/19. With a regular tube-and-wing aircraft I cannot see a jump more than 10% from the airframe - if designed for the same range (more range: less efficiency gain for shorter routes). If we take 1% efficiency gain for every year from improved engine design (and that seems optimistic as it gets harder and harder), we get a maximum of 15% versus neo/MAX. Not taken into account that there can still be something done to the existing aircraft as well like building the fuselage from AlLi or enhancing the wing. The business case for an all new aircraft then disappears in my eyes. But I am not a bean counter…err… accountant.

Another question is if someone will do something in the sector left by the likes of the A300-600R and the B767-300(non ER): 250-300 seats, 4000nm max range. Being hinted to think about that, as can be read in the Pudget Sound article. I do not count that as a B757 successor and  I do not know if there is a business case for that but Lufthansa always cried for “people mover” like that.

Embraer bridging between E1 and E2

Much hype there was during and after the Paris Air Show last year, when Embraer launched their EJet E2 family. 365 orders, MoU and LoI from Skywest, ILFC and five unannounced customers sounded like a good start and some media was quick to compare it to the current backlog of the CSeries, which had a similar amount of orders at this time – but 5 years the “launch” LoI from Lufthansa/Swiss.

Now, a few months later, there are “just” two the two orders that were announced at PAS13: 100 aircraft for Skywest (E175E2) with 100 further options and both 25 E190E2 and E195E2 for ILFC also with an equal number of options. None of the five unannounced customers came forward since June 2013 and no other customer was added.

Last week Embraer announced their numbers for orders and deliveries in 2013. Deliveries for the EJets were exactly at plan with 88 for the year. Orders looked great with American, United, Skywest ordering large numbers of E175 and taking even more options.

But let’s have a deeper look in the orderbook: Open Orders at the beginning of the year was at 279:

    1 E170

188 E175

  73 E190

  17 E195

The E170 is obviously one delivery away from dead. It is too small for the North American regional market, where the new sweet spot if 76 seats in two classes and this is where the E175 fits in ideally. The backlog of 73 for the E190 does not look too bad at first glance, but in fact you have to subtract the 24 E190 for Jetblue as they are deferred until after 2020, when the E2 version of the E190 is available and Jetblue made it already clear that they are aiming for a switch to the E2. It could also be that they will abandon the 100 seater altogether by that time and finally cancel the order.

The 7 E190 in the orderbook from flynas (or Nasair) are also questionable, as the airlines is phasing out their EJets they already have. Another shaky part of the order book are the 24 open orders for E175 from flybe. The carrier is deep in a restructuring phase and has to become profitable soon. But let’s keep them in for that following exercise:

Without the 24 E190 for Jetblue the backlog at Jan. 1^st, 2014 was 255 aircraft. With a constant delivery rate of 88 aircraft per year the backlog will be at zero in Q4 2017 2016. But the EIS for the E190E2 is slated for the middle of 2018, the E195E2 should come in 2019 and the E175E2 finally in 2020. So Embraer has

-          to find more customers for the current EJets

or

-          to speed up the development of the E2 family

Well, in essence, they have to do both, I would say!

Embraer first announced the EJet E2 with in January 2013 when they said that they will be powered by PW1700G and PW1900G engines by P&W. These engines are essentially the engines for the Mitsubishi MRJ (PW1200G) and the Bombardier CSeries (PW1500G). These engines are already existing, tested and, in the case of the PW15000G, certificated. This is the big difference between the EJet E2 reengine program and the A320neo and B737MAX program, where the engines are the pacing item.

The EJet E2 aircraft are getting new wings, new undercarriages, a new flight deck and a full fly-by-wire system: sure, these things take their time, but Embraer took a lot of time already to decide how to react to the MRJ, CSeries and the A320neo/B737MAX. So there should have been more than just a concept at the beginning of last year and Embraer is currently testing a full fly-by-wire system with their Legacy 500 Business Jet. In fact, they “learned” so much that they switched to Moog as a supplier for the FBW system for the E2 Jets, as the Parker system contributed a lot to the delay of the Legacy 500/450 program (there could also be another reason behind that switch, as Parker is part of the “GE World” and GE lost the engine contract…).

In short, I think Embraer has to bring forward the E2 program as much as they can – otherwise they would face a production hole – but wait: there is hope: if the Mitsubishi MRJ would be delayed even further, the two big customers (Trans States and Skywest) for the MRJ would be forced to look at alternatives. The only logical aircraft that could replace the MRJ90 deliveries in the 2016/2017 time frame with the same cabin comfort would be the E175E1. This might be the reason why Skywest took options for 100 E175E1 last year when placing the order for 40 E175E1. Also United, American Airlines and Republic took further options for the E175E1. It looks like there is a considerable “hedging” against a further MRJ delay and this might help Embraer to bridge to gap between the current E1 and the forthcoming E2.

Paris Air Show 2013 Recap

The Paris Air Show 2013 is history – and it wrote (at least a little bit) of aviation history:

Embraer

On the opening day it was Embraer to launch it’s highly anticipated EJet E2 family. Not surprisingly, the E195-E2 will be a stretch of the current E195. Also no surprise that the E170 will not be continued and that the E190-E2 will stay where it is, sizewise. The E175-E2 will be a little bit larger in capacity, stretching it’s fuselage by 0.62m or 24.4inches. The effect is that two more seats can be fitted and in a 1-class 31” layout there are now 88 seats compared to 86 seats in the current E175. This is exactly the figure that Mitsubishi gives for the MRJ90 – any questions? With the same engine as the MRJ will get, the same cabin capacity and a new wing (even larger now than the MRJ wing) the fuel efficiency of the two aircraft should be very close to each other. The MTOW of the E175-E2 is a little bit higher (44.33 t vs. 42.8t), but the Embraer has more range, too (1920nm vs. 1780nm).

Embraer EJets G2 launch at Paris Air Show

Embraer will host a press conference regarding commercial aviation during the Paris Air Show next week on Monday (see the press release here). My strong guess is that this is where we will see the official launch of the EJet G2 Series.

And I guess Embraer will not only announce the official go-ahead but also will announce one or more first customers for the three-member strong family.

Geared Turbo Fan Backlog Secrets

The P&W press release revealing the selection of the PW1133G for the A321neo for Hawaiian Airlines states that the Geared Turbo Fan Family now has more than 3,500 announced and unannounced orders and options. I wondered how much unannounced orders there are and tried to do a breakdown of the announced orders.

PW1100G

More narrowbody orders

As forecasted, we have already seen quite impressive narrowbody orders this year, although the Paris Air Show is still ahead of us.

For example, there are already orders for 461 more A320neo family aircraft – remarkably most of the for the A321neo – this year. In 2012 we saw 478 firm orders, some of which had already been announced at the Paris Air Show in 2011.

The B737MAX had it’s big year in 2012, so we cannot expect that we see more than the 949 orders from 2012 in 2013 again. So far the B737MAX got 121 orders this year.

But I expect more big orders for both narrowbodies in 2013. I already wrote about China and the needs of the airlines there, but now it becomes clearer.  According to CAPA (Centre for Aviation) , the China Times writes that chinese airlines will order about 500 narrowbodies from both Airbus and Boeing in 2013. About half of these orders would be for the neo and MAX models. This would not only be a(nother) boost for both reengining programs, it would also fill further the remaining delivery slots for the current models.

Adam Pilarski from AVITAS still thinks that we see a bubble with all these narrowbody orders. He could be right – if we would see an economic crisis hitting South East Asia and China, a lot of these orders would quickly disappear. But as long as these economies are thriving, Airbus and Boeing (and in the long run probably also Bombardier and Embraer) have nothing to fear but not being able to quickly enough deliver the ordered aircraft.

Good day for Bombardier CSeries!

It was a good day for the Bombardier CSeries yesterday (Feb. 20th).

The PW1500G, P&W’s first Geared Turbo Fan, was certified by Transport Canada. As the development of a complete new engine is always a risk, now one major risk on the whole CSeries program isn’t one anymore. It is also good news for Embraer, planning to use the same engine with slight changes to the externals  dubbed as PW1900G, for the upcoming and still-to-launch E190G2 and E195G2. Embraer can now bank on an engine that is proven in service for a few years when the G2 EJets enter service. That might have been one reason to choose the GTF over the NG34 and LEAP engines from GE and CFM.

But back to the Bombardier CSeries. The aircraft program got also a major commercial boost yesterday, when Ilyushin Finance signed a firm order for 32 CS300 plus 10 options. The original LoI called for 3 CS100 and 7 CS300 with ten options and ten purchase rights, so Ilyushin Finance upped their original commitment substantially.

Now the whole aerospace world is waiting for the first flight of the CSeries (and as well for the first flight of the A350 and London bookmakers are taking bets who is first).

Later today there will be  the conference call for results of the fourth quarter and fiscal year ended Dec. 31^st. Maybe we will hear more on the progress of the program.

Narrowbody Review 2012

Slowly, but inevitably, the year 2012 is coming to an end. Here are some thoughts about the current situation of the narrowbody market:

Orders

 

Boeing now has not yet fulfilled its own prophecy and has “only” 969 firm orders for the B737MAX in its books (with 819 orders in 2012), shy only 31 from the goal to have 1,000 by the end of 2012 and I guess that there will be another order (or more) in December to fill that gap..

Narrowbody Market Shift

AirInsight last week published a report about the narrowbody market, especially about the 100-149 seat segment. What they found is that - in their opinion - the failure of aircraft in this segment was due to either weak OEM's (and I guess that this means that the OEM was undercapitalized) or due to the fact that the aircraft were no clean sheet designs optimized for that market segments but rather derivatives of (mostly) larger planes. As such a "shrink", an airplane carries a lot of weight that is not needed for it's role. For example the wings are too large and heavy, as they were designed for the original and larger aircraft.
The only aircraft that is currently in production and is a point design is the EMB190/195 family - where the EMB195 seems to be a bit underpowered in terms of takeoff length at MTOW, but the thrust is OK for typically flown routes below 1000nm.

Boeing wins a MAX customer from Airbus

SilkAir announced they signed a LoI with Boeing for 23 B737-800 and 31 B737MAX-8 with another 14 options. The orders can be converted to other versions.
This is significant as Silkair is the first customer Boeing catched from Airbus. Silkair currently operates a fleet of 21 A320 with 3 more on order.
Until now it was Airbus who draw customers away from Boeing, the first one being American Airlines - prompting Boeing to announce the (then yet unnamed) B737MAX.

Fairchild Dornier 728Jet

Teal Market Forecaster Richard Aboulafia writes a monthly letter on his website. In his latest letter he asks about the fate of the Fairchild Dornier 728Jet Prototype. Well, here it is: it is inside a hangar of the german aerospace research agency  DLR in Goettingen.

Embraer could feel the heat...

Last week's Farnborough Airshow yielded not many surprises - maybe the surprise was that mayn anticipated orders did not happen.

• Boeing does not have 1000 firm orders (or more) for the B737MAX (but Airbus did not either after the Paris Air Show last year.
• There was no VLA order from Turkish Airlines (nor from any other).
• There was no order for the A320neo or the B737MAX from Pegasus. Apparently Boeing trying all they can to keep Pegasus in the Boeing camp...
• There was also no order from Aeromexico - but all points to an order for Seattle/Chicago here...

But wait - there was one order that was remarkable and that could mark the beginning of a shift in the regional aircraft market. Although this order was not quite a real - firm - order. But the "agreement in principle" between Skywest and MITAC shows that the MRJ gains some confidence in the marketplace despite the recent announced delay in the development schedule and subsequently the EIS.

A few days before Embraer announced their statistics for the second quarter of 2012. backlog is now at a 6 year low for the EJet Family. It fell from 476 aircraft at the end of 2007 to 200 at the end of the second quarter. There are a lot of options, but if these ever get firmed up is not a safe bet.
Embraer shares took a hot following the release of the backlog and analysts called the airshow to be "dismal" for Embraer.
Well, that may be a little bit overstated, as Embraer got a lot of orders at the last airshows, including orders from ALC and GECAS that showed confidence in the EJet Family also from the leasing community.

But in fact Embraer could feel a little bit pressure now to react. The 50 seater replacement cycle in the U.S. regional market just has begun. The MRJ won two rounds, at Trans States and now at Skywest. The direct competitor to the MRJ90 is the E175, but according to todays planning the E190 would get the reengining first. On the other hand Embraer recently announced that there would be an "aerodynamic cleaning up" including new winglets in the works for all the EJet family members that results in a 5% lower fuel burn for the E170 and E175. This could give Embraer some breathing room, but I doubt that this is enough to cope with the brand new design (aircraft & engine) of the MRJ.
Embraer currently plans with an EIS of the E190G2 in 2018, probably meaning that the E175G2 could come in 2019. It remains to be seen if Embraer now speeds up their plans, despite saying that the Skywest order does not change their strategy.

Farnborough Airshow Orders

Here I will try to track all orders and commitments coming in at the Farnborough Airshow (main manufacturers only - sorry).


AIRCRAFT