Archive For The “Sukhoi” Category
The Russian side has been the more vocal; frequently advising the world that an SSJ order from Iran is imminent. Today there is news that might explain the lack of progress to date.
The OFAC has been a thorn in the side of any aerospace OEM trying to do business in Iran. Since so much of what goes into a modern commercial aircraft is made in the USA, OFAC gets to play a spoiler role if that content is greater than 10%.
Sukhoi has apparently managed to reduce USA-content to below 10%. This means Iran can acquire the SSJ without a license from OFAC. Importantly, this time the news came from the Iranian side. The cited article offers two other useful data points: Iran needs regional jets and the SSJ pricing is between $20-25m.
We assess the chances of a deal for the SSJ in Iran now to be higher than before.
The economy has to improve its air travel access to move forward. Iran’s economy has been stifled by aging aircraft and limited new aircraft that kept air travel way below what it might have been. Moreover, if the pricing on the SSJ is really where deals are being considered, then Iranian airlines are looking at an attractive offering. Our pricing guidance in the west for the SSJ has been somewhat higher than the $25m cited in Iran. It would seem reasonable that the Iranian pricing does not include the Venice installed Pininfarina cabin.
SCAC (Sukhoi Civil Aircraft Company) announced they are planning on a 75-seat “shrink” version of their SuperJet. The current SSJ100 seats 98-103. The new aircraft will be upgraded in several areas, including engines, avionics, and aerodynamics. The image below shows an aerodynamic enhancement for the aircraft, including the addition of “saberlets” on the wingtips.
SCAC has been talking about a three-size family from 65, 75 and 95 seats from the onset of the program, and are following through with a second model. Shrinks are not as popular as stretches, as they have proven themselves to be economically compromised. The SCAC decision to move downward to a 75-seat version potentially fulfills a market need.
The idea of a smaller version is not outlandish considering the market. The more typical decision would be to go for a stretch beyond 100 seats. Doing this though puts the SSJ up against the CS300 and E195-E2 – which is going to be a very harsh competitive environment.
But look at the 75-seat market and you see a different situation. The market incumbents are Bombardier and Embraer. Moreover, the most influential market for aircraft of this size is the US regional airline market. What the US regionals select effectively drives the market for the rest of the world, given their large fleet requirements.
There are two models currently in favor in that market, the Embraer E175, and Bombardier CRJ900. Both have strong penetration into large fleets. The E175 is planned to retire in favor of the E175-E2, but the latter is too heavy for current US scope clauses. As long as the E175-E2 does not meet scope requirements, that aircraft has a difficult situation to overcome. Most of its orders are from US regional airlines that cannot deploy it, given current scope. The forthcoming, and delayed, Mitsubishi Regional Jet faces the same issue.
The current scope clauses expire in 2020 but are expected to be re-ratified in union contracts negotiations in 2019 to extend them for another five years through 2025. That effectively blocks the E175-E2 and MRJ from the US market.
This means US regional airlines will have limited choices, staying with the existing E175 and the CRJ900. The E175, while a modern aircraft, lacks the significant economic benefits of the re-engined E2 model, and the CRJ900 is an older, more uncomfortable design with limited passenger appeal. An opportunity exists if Sukhoi can effectively enter this market with a modern aircraft.
The redesign of the SSJ100 means losing four rows of seats with its five abreast configuration. It would seem that SCAC is eyeing the US market since the scope clause has two key numbers – 76 seats and 86,000 pounds MTOW. The SSJ can easily get the seat numbers right, but can it meet the weight restriction? SCAC would likely not have said a word unless they are confident. The OEM is talking about a new wing and using the same Pratt & Whitney GTF engines found on the MRJ. The GTF engines are likely to be heavier than the PowerJet engines on the current SSJ.
But these are technical questions that have technical solutions. The Russian aerospace industry has shown that with the MC-21 they can produce a world class composite wing that is light and efficient. SCAC also mentioned that they are considering adding MC-21 flight deck upgrades to this new SSJ. To get an idea of how influential the MC-21 is, the new SSJ even might be named the MC-21-75.
Assuming the new model SSJ moves forward, the real challenge is this: getting that aircraft certified by the FAA. Until this happens, no US regional can consider it. Is that a “bridge too far”? The answer is no. The US regionals are “bottom feeders.” Their margins are razor thin and any aircraft that brings with it complexity and high cost are not easily adopted. But at the same time, these airlines want lower fuel burn and improved efficiencies. Which is why they ordered the MRJ and E175-E2. The demand is there. SCAC ‘s decision to consider this market is not a bad choice at all.
The next step for SCAC is to confirm they can provide a better wing solution, utilize the GTF and meet those key scope limits. The market is attractive because US scope does not look like easing until 2025 at the earliest. But there is one more challenge that must be met. The US regionals are big and buy lots of aircraft – can SCAC produce fast enough? As one US regional airline president told us “If I want the SSJ, they’ll get it certified”.
The Bottom Line: SCAC is aiming at the right market segment. But it’s a challenging road to get to the right solution. This challenge is primarily technical, including obtaining FAA certification (not impossible since the SSJ has EASA certification), getting the aircraft scope compliant, having at least a 10% economic improvement over the incumbents, pricing the aircraft attractively, and ensuring certainty in a production schedule. If SCAC can accomplish all this, their chances of winning major orders will be quite good.
The Singapore air show got off to a start yesterday. It hasn’t been a noisy affair. Boeing picked up a lot of service business – which is a key goal for the company. Boeing also seems to be using the show to broaden discussions with the world beyond customers about its 797. The big question though is where are Boeing and Embraer going with their deal? There are some conflicting stories about this – some media talk about a 90% deal and others indicate Brazil will not be rushed into this. The Brazilian air force now seems to hold the decision.
The company that seems to be having a great show so far is Pratt & Whitney. It announced an inauguration of GP7200 overhaul capability at its Singapore engine center. Pratt & Whitney also announced orders to supply GTF engines for A320neo for Aviation Capital Group (20 aircraft), SWISS (15), Aircalin (2) and lessor BOC Aviation (12). Then subsidiary Pratt & Whitney Canada signed a contract with Qantas Airways for the maintenance of 51 APUs on aircraft flown by the Qantas Group. The contract covers 20 APS2100 APUs for QantasLink Boeing 717s; 19 APS5000 APUs for Jetstar and Qantas Boeing 787s; and 12 PW980 APUs for Qantas Airbus A380s.
To top this off, Sukhoi announced that they are working on a 75-seat shrink of their SSJ and considering using the same version of the GTF seen on the MRJ for this aircraft. Considering the GTF is also found on the C Series, E2, neo, and MC-21 this is an excellent statement of confidence in that engine. One might argue that for the market between 75 to 150 seats, the market has embraced the GTF as the new standard. Having a GTF solution for the A321 and MC-21 helps boost that program all the way to over 200 seats.
Superjet International provided us with information on the forthcoming winglets for the SSJ. These winglets are being called “Saberlets”.
Today a Sukhoi Superjet 100 performed its first flight with the saberlets at Zhukovsky. The saber-like configuration of the tips installed on to the Superjet 100 are the result of several research, engineering and experimental activities carried out by Sukhoi Civil Aircraft Company with the assistance of Central Aerohydrodynamic Institute (TsAGI).
The geometry of the tips was determined with the implementation of innovative methods of 3D optimization based on Computational Fluid Dynamics – an internal TsAGI know-how used in Russian aviation industry in particular for Sukhoi Superjet 100 program.
The results of research and experiments show the installation of the saber-like tips allows to simultaneously improve the take-off and landing performance and decrease the fuel consumption by at least 3%.
The expected improvement of the take-off and landing characteristics will be obvious for carriers operating the aircraft on regional runways and in hot weather conditions as well as on mountains.
“Sukhoi Civil Aircraft Company is consequently implementing the Sukhoi Superjet 100 improvement program aiming at market expansion and the increase of the number of Customers, the current Operators satisfaction level growth and the maintenance of the high competitive level of the product. The wing tips installation being the part of the improvement program will provide the operators with cost cut up to $70 000 per year per one SSJ100“, said President of the Sukhoi Civil Aircraft Company Alexander Rubtsov.
The end of a full-scale program of ground and flight tests will result in the certification of the SSJ100 with the saberlets and they will be offered as an option to customers. The installation of the tips is possible not only for new aircraft but also as a retrofit. VASO (Voronezh aircraft manufacturer) is the manufacturer of the saberlets kits, the materials used are certified in Russia as well as abroad.
The US House has voted to block aircraft sales to Iran. Putting aside the politics, what does this mean? Ali Akbar Velayati, a senior adviser to Iranian Supreme Leader Ayatollah Ali Khamenei, is quoted as saying Iran does not need American airplanes. Is this realistic?
We do not think so. This is based on the rules followed by the US treasury Department’s OFAC. Any aircraft sales require approval from OFAC licenses if at least 10% of the parts used in the aircraft are made in the US. The rules are extensive and Iran has a special area of attention.
Iran has taken delivery of several ATRs since aircraft exports to Iran were eased. ATR advised us their aircraft are at “slightly over 10%” US components. Here is a list of their suppliers.
There have also been several Airbus deliveries. These deliveries were also subject to US scrutiny. Complicating the matter is also the financing of aircraft. The US EXIM Bank will struggle to get approval for any deal over $10m. US federal law prohibits the EXIM bank from financing exports to Iran since it still designated by the US as a state sponsor of terrorism. Any bank, anywhere, must tread very carefully in financing a deal in Iran. Being caught up in US banking regulations could mean fines and even being cut off from the US banking system. The fear of being caught on the wrong side of US banking system lead to some UK banks even closing personal accounts.
This situation is clearly not as easy as Mr. Velayati says. The aerospace supply chain is US-biased and, adding the OFAC issue makes acquiring aircraft beyond the reach these rules difficult. If we remove Boeing from the equation, what options does Iran have? (Bombardier and Embraer, though not focused on here, are subject to the same hurdles)
Take the Chinese C919 – if Iran could get deliveries – and we can see US inputs are substantial. So, this is not going to be an option, even if deliveries were possible.
What about more Airbus aircraft? As we have seen OFAC must approve deals. The next chart also shows how dependent Airbus is on US-based suppliers. Iran will not get any Airbus deliveries without OFAC scrutiny and approval. If Airbus could deliver without restrictions, it would be doing so.
How about Russia? Their Superjet is certainly an aircraft that Iran’s airlines could use. But even this aircraft has US-sourced components. We understand the SSJ has slightly over 10% of its components being US-sourced. Russia’s MS-21 is also a great candidate for Iran, but the test article has US-made engines and also other US-sourced components. Like the C919 it is not yet available.
Iran’s annoyance at the US House of Representatives can be understood. But the House’s reach cannot be evaded. It’s nearly impossible to find a commercial aircraft free enough of American content to escape OFAC.