CFM power

Scott Hamilton has a piece about how GE and CFM are able to win so many engine competitions and for that went deep into the Republic deal for 40 A319neo and 40 A320neo, to be equipped with the LEAP-1A.

After reading the story I went on and looked at a few public databases, where you can check out which airlines owns which aircraft, with which engines they are equipped and who is (eventually) the lessor of the aircraft.

I was interested in the airlines which already ordered the A320neo, but did not commit to an engine so far. Here are my findings and what they tell me:

1. GoAir: they have a firm order for 72 A320neo

Current fleet: 10 A320 powered by CFM56. They firmed up 10 options for the A320 (classic), no information which engine they choose for these, but I would guess CFM56.

GECAS leases 4 of these aircraft to GoAir.

So both CFM and GECAS have leverage for a deal to sell the LEAP-1A to GoAir. CFM could reduce spare parts pricing for the existing CFM56 and GECAS could lower lease rates.

Now GoAir is reportedly also interested in the CSeries and could announce a deal in July or August.

That gives P&W a leverage to struck a combined deal here, as the PW1524G is the sole engine for the CSeries.

Conclusion: Tie! Everything is possible!

2. Jetblue: Jetblue has a MoU for 40 A320neo

Current fleet: 118 A320 with V2500, 49 E190 with CF34-10E

GECAS leases 13 A320 as well as 35 E190 to Jetblue

At first glance, P&W should have better cards, if one just looks at the A320 engines, but GECAS tries to get a hold here with more leases.

MTU does the MRO for the engines on a power-by-the-hour basis, so they could be involved in a deal for placing the PW1133G on the A320neo's for Jetblue.

Conclusion: It's P&W's to loose - and that's the chance of CFM!

3. Avianca TACA: they have a MoU for 33 A320neo

Current fleet: 42 A320 powered by CFM (mostly Avianca), 30 A320 powered by V2500 (+20 on order)

GECAS leases 14 aircraft to Avianca TACA.

GE has a dedicated MRO shop for the CFM56-5 in Brasil.

Conclusion: CFM's to loose. They have clearly more to throw into that deal.

4. LAN/TAM: 20 firm oders (LAN) + MoU for 22 (TAM)

The airlines are in a merger process.

Current fleet: Large A320 family fleet, powered both by the V2500 and the CFM56 - LAN selected the CFM56 last year for a further 50 A320.

GECAS leases 23 aircraft, mostly to TAM.

MTU is providing MRO for the V2500 at TAM.

Conclusion: Close call! CFM and GECAS have slightly more leverage...

5. Garuda Indonesia/Citilink: MoU for 10 A320neo + 25 Options

Current fleet: 78 B737 (Classics and NG) with CFM56

GECAS leases 40 B737 to Garuda.

Conclusion: CFM can hardly loose this one!

6. Transasia: 6 A321neo on firm order

Current fleet: 2 A320 and 5 A321 powered by V2500, 7 ATR powered by PW127

Conclusion: P&W can hardly loose here!

And now look at some prospective customers:

1. Delta Air Lines

Current fleet:

• GE engines are on 105 aircraft
• CFM engines are on 209 aircraft
• GECAS leases14 aircraft to Delta
• PW engines are on 355 aircraft
• IAE engines are on 27 aircraft with 13 more to come (MD-90)

Most PW engines will go away with the replacement (the last DC-9's and the MD-80's), so the P&W leverage is not that big as it looks.

Conclusion: a deciding factor could be the engine commonality with a possible CSeries order!

2. American Airlines

Current fleet:

• GE engines are on 73 aircraft and will be on the 6 ordered B777-300ER
• CFM engines are on 154 aircraft and 54 more ordered B737-800
• GECAS leases 61 aircraft to AA
• PW engines are on the 229 MD-80's, which will then disappear

Conclusion: never heard so far that AA is interested in the CSeries, so this is CFM's to loose.

3. Air France/KLM

Current fleet:

• GE engines are on 146 aircraft
• CFM engine are on 210 aircraft
• GECAS leases just one aircraft to AF/KLM (is that right?)

Conclusion: hopeless for P&W, M. Sarkozy will never let AirFrance order an engine without french content if there is one available.

Airbus A320neo order speculations

We are just days away from the Paris Air Show 2011 and every day there are more speculations about who will order how many aircraft at the show – and which ones.

The one thing that seems to be clear though is that the A320neo will get the bulk of orders.

So let me take part in the speculation game and start with the “Star” of the show:

Here is my guessing about who will order how many and the engine choice:

AirAsia	150-200	LEAP-X
Republic	40-80	PW1100G
Qatar	30-50	PW1100G
GECAS	50-100	LEAP-X
ALC	25-50	LEAP-X/PW1100G
CIT	20-30	LEAP-X/PW1100G
GoAir	50-70	PW1100G
SAS	30	PW1100G

In total we could see more than 600 orders/commitments for the A320neo family, with both engine makers getting their share of the market.

As for the LEAP-X it is crucial to get orders – GE seems to invest heavily in the AirAsia order, with GE becoming a sponsor of Tony Fernandes’ Formula 1 Lotus Team. Even if GE says that those two deals are complete separate…

As the CFM56 is AirAsia’s current engine choice, CFM was in the front runner position anyway. It remains to be seen, if Fernandes managed Leahy to convince him that a conversion of orders for the A320 ”Classic” can be transformed into A320neo orders and how many. And we will also see if this deal will be even larger than the yet-to-be-finalised order of 180 aircraft by Indigo.

Republic already placed a deposit in Toulouse, so we can expect an announcement about a fleet rollover for Frontier soon. As they already ordered the CSeries, they probably lean towards the GTF. But it remains to be seen, if the CSeries order stays intact. The financial troubles at Republic could mean that Airbus buys Republic out of the CSeries deal.

If Qatar finally decides to order the CSeries, they should decide for the GTF on their up to 50 neo's, too. But who knows what U-Turn Al will decide when he wakes up on the day of the planned signing ceremony. If he had a bad dream, all hid plans can change in a minute...

GECAS of course is the most natural LEAP-X customer. Nothing to add here...

After opposing the A320neo from the start, even Steven Udvar-Hazy seems to jump on the bandwagon now, as was reported earlier. I expect a split between LEAP-X and the PW1100G here, as well as from CIT.

GoAir obviously is in the market also for at least 50 A320neo. That seems a lot for an airline that has just 10 aircraft by now, but the fast growing Indian market is hungry for aircraft. The V2500 has a large customer base in India today and the PW1100G made the race at IndiGo, so PW might have the upper hand here.

SAS is looking for the A320neo, too, and I think this is the airline that is speculated to be the first neo-customer currently flying the B737NG. They have looked into the CSeries also, but decided to preserve cash by leasing 2^nd hand B737-700. SAS did not rule out to order the CSeries later, so they could lean towards the PW1100G on the A320neo to have engine commonality (sort of), if they ever decide to order the CSeries.

There might be others to come forward and order more A320neo – who know. John Leahy understands how to do good marketing and always pull out a rabbit out of the hat…

The absent LEAP-X customers

It is very early to say anything about the long-term share of the Geared Turbo Fan and the LEAP-X on the A320neo. On the other hand it is notable that there are now three announced engine choices for the A320neo and none of them is in favour of the LEAP-X.

• ILFC opted for the GTF for at least 60 of their 100 aircraft (MoU with Airbus yet to be firmed up). They have an option for the GTF for the remaining 40 aircraft, but are in talks with CFM about the LEAP-X. Apparently ILFC is not yet convinced to order the LEAP-X.
• Indigo: this can be deemed as an easy win for P&W, although also CFM fought hard for this large deal. Indigo currently uses the V2500 on their "classic" A320.
• Lufthansa: as I wrote in another blog entry, the most important win for P&W so far. They initially ordered the V2500 for their A320, but when RR had problems with the High Pressure Compressor, they had to switch to the CFM56. By the time the A321 was launched, the V2500 then became Lufthansa's choice again - but for the A319 Lufthansa favoured the CFM56. I see two reasons for their split: one is to get a maintenance license for both engines, as Lufthansa Technik is a major player also in the engine maintenance business and saw business opportunities with third parties. Another reason is that the A321 typically flies on longer routes than the A320 and A319, where the better engine SFC of the V2500 plays a bigger role. On the other hand, the CFM56 could have an edge if you fly shorter routes and more sectors a day, as the CFM56 with it's single stage turbine has lower maintenance costs than the V2500. Now Lufthansa ordered the GTF for both the A320neo and the A321neo - a significant move in my eyes!

Now - who is the most probable LEAP-X customer, once ordering the A320neo? GECAS of course! There is no order for the A320neo from GECAS so far - this is no judgement so far, but if Airbus collects some more and potentially large orders by the time of the Paris Air Show in June and GECAS does not come on board, I have a sense that there could be a problem with the LEAP-X - as GECAS should be the customer who has the best insight into the engine.