A320neo deliveries

Reuters reports that August (as well as full year) deliveries for the A320neo are disrupted by slow deliveries of PW's PW1100G. The goal is to deliver about 200 A320neo this year, only 78 have been delivered by the end of August.
That deliveries with the PW1100G are slow and delayed is not particulary new. Not mentioned in the article though is the fact that alos deliveries with CFM's LEAP-1A slowed down in the last two months. After delivering 10 A320neo with the LEAP-1A in June, there were 6 in July and 7 in August. For the PW1100G the numbers are 1 for June,  3 in July and 3 in August.
An indication for future delivieries is are the numbers of first flights with the respective engines:
In June 12 A320neo with the LEAP-1A made their first flights, then 5 in July and only 3 in August.
For the PW1100G the numbers are 0 in June, 4 in July and 8 in August.
So it looks like the situation at PW gets (at least) a little bit better, but worse for CFM.

CFM A321neo noise levels revised

Yesterday the EASA published new noise levels for the A321neo, which now include the "right" noise levels for the A321-251N and A321-253N, fitted with the CFM LEAP-1A engines. As for the A320neo, the A321neo with the LEAP-1A is a little bit better (read_less noisy) than the PW1100G. This is surprising, as P&W always claimed that the GTF concept has, beside better fuel burn, it's merits in extreme low noise because of the slower spinning fan and the better damping of the low pressure turbine noise due to better atmospheric dampening.
I would be interested to hear how P&W and CFM explain the difference...

The CFM LEAP LPC issue

For the first time CFM acknowledged, though not directly but through Boeing's B737MAX chief engineer Michael Teal, that the CFM LEAP-1B has an issue with the stall margin of the LPC. This was widely known in the industry for months now and in online forums like airliners.net were some hints to that issue. It is alos clear, that not only the LEAP-1B

Indigo business model threatened by PW1100G?

Yesterday I read that Indigo sees their business model threatened by the engines of their A320neo – because of  the longer start-up times of the PW1100G (dependent on how long the engine was out after shutdown) the aircraft has to wait up to 2 min. longer with their engines at idle before the aircraft can begin to roll and taxi for takeoff.

Now let’s have a look if there is anything in this claim by looking at how Indigo actually operates their aircraft:

According to flightradar24 the 3^rd A320neo (VT-ITA) flew on May 2^nd from Delhi to Nagpur. The aircraft landed perfectly on time at 3:40am (UTC). It took off again 52 minutes later, 7 minutes later than scheduled but early enough to arrive back in Delhi 4 min. ahead of the scheduled arrival at 5:56am.

The 2^nd leg of the day went to Bangalore with a scheduled departure at 7:30am (actual departure time 7:55am). The aircraft arrived Bangalore 3 min. ahead of schedule at 10:17am. Scheduled departure back to Delhi was at 11:15am, which was missed by 9 min. Arrival in Delhi then was 5 min. ahead of schedule at 13:50am.

So we can see no delays stemming from the start-up times. The 2 min. longer start-up time is an the maximum, which only occurs when the engine was off for about 2.5 hours. But turn-around times for the two legs was below one hour, so the extra start-up time should be

A320neo flight test program

After Airbus launched the A320neo program on Dec. 1^st, 2010 we are now close to entry into service, with Qatar Airways as the first customer. After several - say - hick-ups in the test program it now looks as the PW1100G powered version is successfully completing the last steps in the certification program. The third aircraft with the GTF engines, an aircraft that will be delivered to Indigo later, joined the test fleet and is doing Function and Reliability testing. There were two hick-ups there two, one in Thessaloniki, were the aircraft was on ground for several days and another in Kiruna, were the aircraft flew back two days later.

After Airbus Press Conference: Rate Increase and LEAP-1A delay?

Airbus today announced their final 2014 orders and delivery results. Beside a new delivery record there is one noticable item that begs two questions: the increasing backlog of the A320ceo shouts and screams for a (very) near term announcement of a rate increase, which was probably decided some months ago. Also, it puts into question if the CFM LEAP-1A, the second engine for the A320neo, will be available on time. The PW1100G seems to be "out of the woods", getting certification late last year and Airbus CEO Bregier during the Investors Days in December said that he expects the first delivery of the A320neo in November 2015.
The backlog for the A320ceo stands now at 1508. This is 38 more than at the end of November, which I analyzed here. Subtracting all 102 "suspicious" orders gets us to 1406 open orders. The still not booked order from CASGC would lead us then to 1476 open orders for about 1164 delivery positions until 2018. So Airbus overbooked the A320ceo lines by 250 aircraft at current production rates.
Now, as I said above, I think a rate increase is coming for sure. For one to clear the A320ceo backlog as soon as possible, but also to be able to offer earlier production slots in upcoming campaigns.
As for the overbooking of the A320ceo, there could also be another reason: the LEAP-1A has still not flown on the GE Flying Testbed. At the time the LEAP-1C began the test campaign on the other GE testbed in early October CFM said that the -1A would follow within a month. Now we are two months later...maybe something was found during the -1C test campaign that needed a change for both variants?

„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.

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).

A320neo engine orders at Paris Air Show

The ever-entertaining story about market share on the A320neo family goes into another round at the Paris Air Show. Two years ago CFM hit back hard at P&W during the Air Show. P&W had won the first round of orders back then with ILFC first committing to the PW1100G for 60 of their 100 aircraft strong A320neo order. Also Indigo choose the Geared Turbo Fan as well as Lufthansa.

Then CFM came back after redesigning the LEAP-1A with another (7th) stage of low pressure turbine and a slightly larger fan (78" instead of 75") to gain SFC. CFM then won SAS, Republic, Air Asia, GECAS (no surprise here), the remaining 40 aircraft from ILFC and Virgin America and was in a comfortable lead. During the last two years each of the two manufacturers won a deal here and there and the CFM consortium is still ahead with about 53% of the engine orders. So let's take a look at the A320neo orders which do not have an (announced) engine decision yet and how the picture could change after the Paris Air Show.

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

GE buying Avio?

There are reports that GE might buy Avio from private equity firm Cinven.
Avio is a supplier for the GEnx engines and for also CFM.
But what is maybe more important is that Avio is also a supplier for the PW1100G Fan Drive Gear System.
Avio has a long history in designing and building gear systems - the ADP (Advanced Ducted Prop, build from a PW2000 core), tested by P&W back in the early 90's, used a (then Fiat) Avio reduction gearbox.
So what is behind GE's move to acquire Avio? There are three possible motivations:
1. GE just wants to grow (and participate in some revenue from the PW1100G program)..
2. GE wants Avio to keep away from P&W in the future.
3. GE wants to get the intellectual property of the PW1000G Fan Drive Gear System to have a option to move to a gear architecture in the future - possibly for the next generation of narrowbodies, expected now for the late 20's/early 30's.

Surprising engine choice

Last week Aviation Week came out with a story that Philippine Airlines opted for the V2500 and PW1100G for their ordered A321ceo/neo fleet and chose the Trent700 for their new A330-300 fleet.
As of today the whole PAL fleet is powered by either CFM or GE engines this would be a surprise if true - but also shows that PW gained market power through the buy of the RR share in the IAE consortium.
Looking at the A321 in particular though, the choice of the V2500 is not that surprising. From here I pulled all A320 deliveries from this year through August 31: about 84% of all delivered A321 have the V2500. In contrast, about 60% of the A319 and A320 were delivered with the CFM56. As the A320 counts for roughly 76.5% of all A320 family deliveries and the A319 for 7.5%, the CFM56 has the lead with 53.2% market share over the V2500. This is slightly down from 2011, when the CFM56 had a share of 56% for the whole year. In 2009 I found that the market share of the CFM56 was 61%. So with the shift to larger narrowbodies, like I described earlier, the market share in the narrowbody engine segment also changes.

Norwegian goes the American way...

That was a surprise this morning - it was long rumored that Norwegian is one of the airlines that already committed for the B737MAX (100 firm orders plus 100 purchase rights in addition to a follow-on order for 200 B737-800NG), in that case the -8 model. But that they also would order the A320neo (MoU for 100 aircraft plus 50 purchase rights) could not have been expected.
There are two possible explanations that come to my mind as reasons for that decisions to go away from a single-type fleet:

1. They went the AA way (of negotiating), meaning they negotiated with both Airbus and Boeing until they got a deal from both they could not resist to close them both.
2. Their anticipated growth is too large that one of the OEM's could deliver aircraft fast enough to satisfy that growth.

On the other hand it is a little bit discussable if a mixed fleet of B737-800NG and B737MAX-8 would be a single-fleet type anyway. The engines (CFM56-7BE and LEAP-1B) do not have anything in common and Boeing itself talks about 85% commonality between the NG and the MAX. So Norwegian would have had a two-type fleet anyway until the last -800NG would have been phased out. Now that Norwegian gets aircraft from both Airbus and Boeing the last -800NG will be phased out earlier so that the (at that scale) marginally higher costs through having a two-type fleet will be (probably) more than offset by the lower fuel costs.

The next interesting question will be the engine choice for the A320neo. Although the selection of the LEAP-1A to complement the LEAP-1B on the MAX-8 fleet would be the most logical choice, they maybe also go the AA way and buy from both engine manufacturers, like AA did it recently for their A319 (CFM56) and A321 (V2500). So the PW1100G could come into play - the factsheet that Norwegian provided with their press release shows the fan diameter of the PW1100G (81"), but that does not necessarily say anything...

Embraer decides in favor of EJet's

Embraer decided to abandon plans for a new 5 abreast aircraft for now and instead opted to reengine to EJet's in the latter half of the decade - EIS could be in 2018. Given that Embraer could not do both at the same time - financially, but also due to manpower restrictions, as the KC-390 is in development also, this seems to be a wise decision.

Let us look at the timeline: in 2018 all new engines currently under development for the MRJ, CSeries, the A320neo, the B737MAX, the C919 and the MS-21 will be in service. Of course one could ask at least in case of the latter two if the EIS dates for these will stay where they are now. But Embraer will have a good idea how the engines - two versions of the LEAP (the C919 LEAP-1C will have the same turbo machinery as the A320neo LEAP-1A) and three types of the GTF (MRJ, CSeries and A320neo/MS-21) - are doing during development. An EIS in 2018 would probably mean an engine selection about 5 years earlier, around 2013, maybe 2014. By that time the PW1200G and PW1500G are flying at least on the respective aircraft prototypes and the first PW1100G engine should run on ground (the LEAP-1A seems to be a bit behind).

Changing the engine landscape

That was really a big surprise for everyone, I guess! Not so much the fact, that PW bought  RR out of the IAE – that was considered by UTC for about two years. The real surprise is the Joint Venture to tackle the market of next generation single aisle aircraft – in particular, of course, the Airbus A30X and the Boeing NSA/B797.

At first glance, this is a technical win for Pratt & Whitney, as, at least in the near term, development will focus on the Geared Turbo Fan technology. The Open Rotor concept, advanced geared technology and “other advanced configurations” will also be pursued, but it seems that the GTF has won for now.

RR rationale 

But what is the reason for Rolls Royce to “give up” their own plans (at least for the nearer future) for next generation engines in that market? So far Rolls Royce planned with three options: Advance2, a two spool advanced turbo fan, Advance3, a three spool configuration and the open Rotor option as the answer for beyond 2025. Work on these concepts will continue, RR President  Mark King says, but to what extent is unclear. King also says that the formation of the joint venture should not be seen as a shift in strategy, but as a natural extension of their strategy and an elegant solution. Well, this is at least a discussable point of view…

The JV does not include the PW1217G and the PW1524G for the Mitsubishi MRJ and the Bombardier CSeries. An interesting question would be if Rolls Royce will compete with an own engine for the reengining of the EJets or the clean-sheet narrowbody CSeries competitor. P&W logically would offer versions of the PW1200 and PW1500 (maybe with added technology, depending on the EIS). Rolls Royce could become a risk sharing partner in these engines, but this seems unlikely.

A little bit in contrary to what RR officially said, they were also in the running to power the A320neo, but lost to CFM and P&W. Inside the IAE there were no agreement about the architecture of an offer for the A320neo, so both major IAE partners took their offer to Airbus. As RR had difficulties to scale the three spool concept down to the size of the neo thrust requirement (the most inner spool had such a small diameter that it could not withstand the torque).

The consequence was that Rolls Royce would have been out of the new narrowbody business once the last A320 with V2500 engines were delivered. Of course the aftermarket business for the V2500 would have been a long cash-in program for Rolls Royce, but without at least a participation in a running program it would have been very difficult to get back into the business once an A30X or a Boeing NSA where on the table. The fate of Pratt & Whitney after they lost their B737 business with the JT8D is a good example what Rolls Royce is about to avoid with the new JV and their “modest financial investment” in the PW1100G-JM.

PW rationale

So there is a good reason for RR to start the JV with P&W. But what about P&W? What is their rationale? Maybe it’s like that:

With a unbeatable customer base, CFM seems to be a set candidate for the Airbus A30X as well as the Boeing NSA. It is unlikely that one of the aircraft OEM’s will offer three engine options, so one of either P&W and RR would have lost. Maybe each of them would have gotten one application – but with both joining forces, this CFM antagonist can be seen as an almost sure second choice for both aircraft, without competing against each other and spending a lot of money to win against the other. So it is a win-win situation for both OEM. Not so much necessarily for the existing partners in the PW1100G-JM, JAEC and MTU. Their shares in the next generation engine program could be lower than it is in the PW1100G-JM now. On the other hand  they now have the possibility to enlarge their share in the V2500 and at least MTU already submitted a statement that they intend to do so.

IAE exit

Why does Rolls Royce exit the IAE consortium?

First, this is good news for P&W and the PW1100G-JM. Marketing the GTF engine becomes easier, as the owner of IAE and the partners in the PW110G-JM are the same now. Campaigns were airlines take both the classic version and the neo version of the A320 (like American Airlines and LAN) are now easier to handle. Also existing V2500 customers who order the A320neo can be given cross concessions easier (look what CFM/GECAS did for Frontier to get the A320neo business).

For Rolls Royce it means they get $1.5bn in cash immediately and a steady stream of cash flow in the next 15 years without any cash out (winning new campaigns usually means a cash out) and saving own IAE personnel, as they are “just” a supplier now).

Now - does Rolls Royce need cash? If one looks at the balance sheets of the last years: not immediately. But with the Trent1000 three years behind (cash-in) schedule, at least two of the A350 models delayed, further development costs for the A350-1000 TrentXWB engine, there could be a cash problem approaching Rolls Royce in the next couple of years, so the deal with P&W to exit the IAE could ease that.

Paris Air Show 2011

That was quite an event! I will focus on just some of the most important topics here, the most important of course being

A320NEO

1029 order and commitments! (plus a few more options) - Never ever in history there was an aircraft selling so fast. Of course, a comparison to the B737NG is unfair, as 15 years ago we did not have such big and emerging markets in China, India and all over Asia (more than 460 A320neos are ordered by Asian airlines so far). Also I am sure that a reengined B737NG or a NSA/B797 would sell as good as the A320NEO (or in the case of the – hypothetical – B797 even better). But let us roll back one year: there were many skeptics of the A320neo, saying that demand for such a “warmed-up” aircraft would just not be there. Others said that Airbus might be forced to convert many of the orders for the current A320 to the –neo model. Both are proved wrong today. Even Air Asia boss Tony Fernandes did not manage to convince John Leahy to convert some of the old orders to the –neo.

Now if American Airlines would really decide to order 100 A320neo (probably they are most interested in the A321neo) this summer, there would be lots of activities starting in Chicago and Seattle.

The A320neo brings us right away to the next big topic at this year’s Airshow.

LEAP-1A vs. PW1100G

Before I get started, please read what Addison Schonland wrote in his piece on AirInsight. As I laid out before I have my doubts about the performance claims of the LEAP-1A. And as I heard, CFM did more PW1100G-bashing at his media briefing just ahead of the Airshow than talking about their own product and it’s merits. A rock solid confidence looks different…

Nevertheless, CFM managed to get large deals at the Airshow. The largest, of course, was the order for 400+ engines for the 200 aircraft deal of AirAsia. But this was CFM’s to loose, as they are providing the CFM56 for the current 175 aircraft order from AirAsia, GE won with the CF6-80 for AirAsia’s A330-200 just recently and GE became a sponsor of Tony Fernandes F1 Lotus Team.

I did a prediction about A320neo orders and the respective engine choices just a week before the Airshow opened. I was wrong at SAS and Republic – both choose the LEAP-1A over the PW1100G. As it appears, I underestimated the market power of CFM, GE and GECAS.

I also expressed before that I think there could be an alliance between Airbus and CFM to keep potential CSeries customers away from ordering the Bombardier aircraft by giving them deals they cannot deny. This strategy can work with airlines which have business with CFM, GE and/or GECAS today.

Look at Republic: the whole Frontier fleet is powered by the CFM56 today - about half of the A319 fleet from Frontier is leased through GECAS.

Republic has the largest Embraer EJet fleet in the world, all powered by the CF34-8/-10. Most of the E170 in the fleet of Republic Airlines, one of Republics subsidiaries, is leased from GECAS.

So GECAS, CFM and GE have all possibilities to sweeten the LEAP-1A deal with discounts on spare parts and leasing rates – one thing that Pratt&Whitney can not do.

SAS on the other hand is a large B737NG customer and they also have a CRJ900 fleet powered by the CF34-8. They choose 2^nd hand B737-700 over the CSeries earlier this year. This decision was probably more cash driven, as leasing rates for used aircraft are of course cheaper than for new ones and SAS is going through a tough time right now. SAS has also A319 and A321’s in their fleet, powered by the IAE V2500. But firstly the V2500 powered fleet is much smaller than the B737NG fleet, and secondly, PW always has to deal with Rolls Royce on the V2500 business. And as RR has no stakes at all in the –neo business, they have no interest in building a bridge for PW at all.

One A320neo deal that did not materialize in Paris was the anticipated order for 50 aircraft from Qatar (as well as the “deferred” CSeries order). The A320neo will come one day of the other, just as U-Turn Al’s mood allows, but I guess the chances for the PW1100G are better here.  Although GE can throw their GGE90-115B business on the B777-300ER/-200LR fleet here (Qatar just ordered 6 more of them in Paris) and CFM powers 4 A340-300 in Qatar’s fleet, the A320 fleet is powered by the V2500 and PW might to persuade Qatar by making good deals on both the CSeries and the A320neo.

CSeries

John Leahy still thinks that Bombardier should scrap the CSeries program. As an Airbus employee he has to say that, regardless of what he thinks.

But as in the weeks before and at the Airshow there were five new customers announced (three of them unnamed so far), I think it became clear  that a growing number of airlines got convinced that in this market segment an optimized aircraft is better suited than, say an A319neo. Surprisingly, the CS100 got the biggest chunk of the new orders – maybe something to think about at Embraer…

I guess we will see a few other orders for the CSeries until the end of the year:

- Delta Air Lines

- Qatar (finally)

- GoAir, which just ordered 72 A320neo, hinted for a “raft” of CSeries soon to order

Boeing

Boeing did not raise the bar very high in the run-up of the Airshow, but did extremely well with orders, especially on the widebody front. It remains to be seen, if the revised A350-1000 can break the monopoly the B777-300ER enjoys in their segment. A stretched A350-1100X was denied by Airbus officials, but we will see…if the Rolls Royce managers are wise, they build in another 5% thrust margin above the 97klbf in their revised Trent XWB nacelle lines to cover for growth.

Scott Hamilton further explains Boeing’s success – I suggest to read his entry for more.

Other stuff

There was lots of other stuff to talk about – but I won’t, at least for today…

Some airlines can't wait for Paris

The official opening of the Paris Air Show is still four days away, but there are a few airlines who can't wait to announce their (A32Xneo) orders.

Cebu Pacific and GoAir both placed orders today.

Cebu Pacific (I did not even have that on my list yesterday) placed an MoU for 30 A321neo. They also firmed up options for 7 A320 (Classic). Cebu stated that with the A321neo they will be able to fly to destinations which cannot be reached with the A320 today, namely Northern Japan, Australia and India. They will outfit their A321neo's with 220 seats - I have not heard of any airline with such a dense seating in a A321. Air Berlin has 210 seats, Air France in the domestic market version 206 seats.

And then there is GoAir - for 72 A320neo. I had them on my list for Paris, but for a maximum of 70 - well, not too far off. GoAir is owned by the Wadia Group, a powerful conglomerate, and got a new CEO just a few days ago, the former Chief Revenue Officer from Air One (Giorgio De Roni), which was (more or less) forced to merge with the old Alitalia.
GoAir has 10 A320 in the fleet, with 10 more to come in the next two years. By then, with a fleet of 20 aircraft and after 5 years of operation, they can fly internationally.

Both airlines fleets are powered by the CFM56 today and both airlines gave no indication of engine selection yet. It remains to be seen if my assumption that the PW1100G has the better cards in the indian market. At least the planned first delivery date (2015) for GoAir's A320neo seems to indicate a GTF selection here.