"Mystery" A320 customer

Airbus revealed the November O&D spreadsheet today and there is an undisclosed customer for 100 A320 family aircraft in it.
Now there are - competing - two airlines which talked about a 100 aircraft strong A320 order or were rumoured to place an order soon: Airasia and Lionair.
So who is the "mystery" customer?
Airasia needs more aircraft soon - their growth strategy especially in Indonesia, where they want to give Lionair a hard fight, took a setback with the failed takeover of Batavia. So to keep or become competitive in Indonesia, they need more aircraft soon. Not just neo's but also ceo's.
Lionair on the other hand has an orderbook large enough to wait for the neo...
Let's take a look at the neo orders at the end of October: they stood at 1469.
We know that Transasia ordered another 6 and Interjet 40 neo's. This is 1515.
In a presentation at the EADS investors day last week John Leahy mentioned to have 1579 orders for the neo - a difference of 64 aircraft that can only be a part of the 100 aircraft strong order from the undisclosed customer.
So I have a very strong feeling that Airasia ordered another 64 A320neo and 36 A320ceo.
And now I wait eagerly for a reaction (read: counterorder) from Lionair...;-)

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.

The Airbus vs. Boeing Ad-War

An „ad-war“ broke out, media says, when Airbus published an ad in several aerospace publications, accusing Boeing to lie when they compare performance of the B737MAX with the A320neo and the B747-8I with the A380.

A good summary can be found here. What I found amusing is that obviously the Pinocchio theme is a tit-for-tat response to spat over market share back in 1994...

One could see it a little bit differently: maybe the war was “broken” by Boeing when they began to publish their ads about B737MAX vs. A320neo and B747-8I vs. A380 performance?

But lets look at the facts:

Boeing always claimed that the B737-800NG has an 8% cost advantage versus the A320 an a per-seat basis and as the B737-800NG has a typical seating of 162 seats versus 150 seats in the A320 this means that the cost per flight are more or less equal, as the seat difference is exactly 8%.

Now Airbus claims that the A320neo needs 15% less fuel than the A320ceo. Boeing claims that the B737MAX needs 13% less fuel than the NG.

Let’s say fuel costs are 50% of overall (cash operating) costs.

Then the A320neo cost per flight is 92.5% of the A320ceo cost per flight (0.85*50% fuel costs + 50% other costs).

The B737MAX-8 cost per flight is 93.5% of the B737-800NG cost (0.87*50% fuel cost + 50% other costs).

So after reengining there is a slight advantage for the A320neo in terms of cost per flight.

On a per seat basis there is an advantage for the B737MAX-8 of 6.85%.

Of course, this is a very simplified view at the costs. Any change in maintenance costs of the airframe and the engines also play a role. But if you compare the LEAP-1A powered A320neo with the LEAP-1B powered B737MAX-8, the changes in engine maintenance costs should be comparable to the CFM56 powered A320ceo and B737-800NG.

The question is why Airbus and Boeing are “communicating” via ads? Airbus says that the Boeing ads might let “less sophisticated airlines” keep from talking to Airbus directly.

“Less sophisticated airlines”?

Of course, there are airlines which have a better aircraft performance analysis than other ones – the larger the airline, the better the capabilities, I guess. I know Lufthansa always does a very thorough analysis before buying any aircraft. Singapore Airlines also does very good work here as many others also. Air France probably as well does a good job here, although on the engine side thy seem to be always preferring a GE/CFM engine choice (if available), as the national player Snecma (Safran) is involved there.

But look at the recent comments from Estonian’s CEO about the CRJ900, calling the aircraft not competitive for markets with less than 80 seats (the CRJ900 has 88 seats at Estonian). So why, one could ask, did they choose an aircraft with more than 80 seats when they know they want to use it in markets with less than 80 seats?

Clearly, the department for aircraft performance analysis at Estonian – if there is one – lacks some competency, as well as all of the upper management, as they finally gave approval to buy the aircraft.

So Airbus in the end might have a point here in launching the counter-ad…

Pegasus Order

The turkish carrier Pegasus is about to announce their choice for the next 100 narrowbodies, ATWonline reports. The airline has already decided on which aircraft to take, ATW says and wants to announce it shortly. Obviously A320neo and the B737MAX are in the competition. As Pegasus has a fleet of 40 B737-800NG and two B737-400 right now I would rule out the CS300 as it would be a smaller aircraft than the ones currently in use.
One sentence in the article might give us a hint who will be the winner:
"The carrier expects to start receiving the new aircraft in around three years."

1. In 2015 only the A320neo is available, the B737MAX is coming to the market two years later. So one might think that the A320neo might be the aircraft of choice.
2. But as I laid out earlier, Boeing has about 1,000 B737NG positions to sell until the B737MAX will be the only B737 version produce by Boeing, which could happen in late 2019, about two years after EIS of the B737MAX.

So my guess is that Boeing made an irresistible offer to Pegasus. As Boeing is the provider of the current fleet, they have to loose more than Airbus anyway here.
But let's don't underestimate John Leahy - maybe he surprises us (well, at least me) one more time. But my bet is on Boeing here!

Boeing B737MAX orders gaining steam

This week Boeing firmed two orders for the B737MAX. On October 1st GOL signed for 75 B737MAX-8 and two days later GECAS for another 75 copies of the -8. Another unidentified customer signed for 22 B737MAX. Boeing has now 821 firm orders for the MAX.
What is maybe more important is that Boeing still has no order for the -7. Also the A319neo has only very few orders so far. There are two possible explanations for this:
1. Airlines are shifting to larger aircraft.
2. Other aircraft, especially the Bombardier CS300 is the better aircraft.
I discussed this also in an earlier post. Against the first assumption speaks that there are markets that do not support a 180 seater and a 150 or 130 seater is more economical.
But there are not really too much orders for the CSeries - yet. My guess is that once first flight happened (and went well) we will see some more orders, maybe also on a larger scale.

Another sidenote of the GECAS order is that there are "only" 10 orders for the B737-800NG included with 15 more options instead of the 25 firm orders originally announced. I also discussed this earlier: Boeing has to sell something like 500 more NG's to close the gap until the MAX enters service. And as a ramp up to full production will probably take another two years, Boeing needs to sell another 500 or so if they do not want to have an overall slowdown in B737 deliveries.