Archive For The “Aircraft” Category

Hawaiian’s fleet choices

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At present, it is still a rumor. But the decision process dates back at least four months.  Hawaiian has been the “last man standing” on the A330-800 with six orders.  The airline has made it plain months ago they were uncomfortable with this situation.  Nobody wants to own an orphan aircraft.  Besides, no lessor or bank would do a sale and leaseback.

The current airline position on this story is: “It is well-known that Hawaiian Airlines has been negotiating with both Boeing and Airbus for the next addition to our fleet. We have not signed an agreement with either manufacturer. We look forward to announcing the conclusion of those negotiations when it is appropriate to do so.”

Airbus advises us the airline has made no announcement and they will not comment on any rumors.  Boeing also says it does not comment on “customer discussions”.

From our perspective, it makes sense that Boeing is trying to ensure the A330neo program does not gain any traction. If Hawaiian switches away from Airbus, the A330-800 has no orders.  We can understand why Boeing might be prepared to be aggressive with the Hawaiian order.

Airbus has, so far, made the most market gains in the single-aisle side of the middle of the market segment.  For example, Hawaiian recently introduced the A321neo in its fleet which has taken over some routes traditionally using 767s.

Boeing is at a critical juncture; it is paramount that the Airbus infiltration of Hawaiian is halted.  After all, the airline was an all-Boeing fleet once. It could be that the geographic position of the Honolulu hub also drives Boeing’s effort as it will ideally suit the 797 potential capabilities to serve Asian and North American routes.  In short, the Hawaiian deal could be more influential than it looks.

The crucial issue here is this:  If Boeing is prepared to aggressively move to win the airline, is this a strong hand or a weak hand?

The A330-800 is supposed to seat 257 and have a range of 7,500NM.  The 787-9 should seat 290 and have a range of 7,635NM.  Several years ago, in an interview with CEO Mark Dunkerley, he spoke of looking at markets from Hawaii as far as the UK.  Honolulu to Heathrow is 7,237NM.  Therefore, the range is of great interest but possibly not the primary driver.

But looking at the choice, if the airline goes with the 787-9 it is listed at $281.6m and seats 290.  The A330-800 lists at $259.9m, seating 257.  The A330-900 lists at $296.4m and seats 287.  If Hawaiian is really looking for a ~290 seater, the A330-900 was likely to be a better bet than the 787-9 because almost certainly it is cheaper, regardless of list prices.  Almost certainly Hawaiian looked at converting to the A330-900 but might have demurred because it is just too big.

If Hawaiian did not want to upgrade (like other A330-800 customers) it seems reasonable to assume they may want the range, but not the extra capacity.  Ergo, what might Boeing be doing by offering the 787-9 rather than a better-sized 787-8 with 242 seats?  The 787-8 has a range of 7,635NM after all.

What seems to be going on – if the “rumors” are true – is that Boeing could be fighting hard to win Hawaiian.  Boeing is unlikely to be concerned that the A330-800 program could potentially hurt the NMA business case. Bear in mind that the NMA would be optimized for the segment, while the A330-800 is a compromise. The Airbus may be cheaper, but that does not naturally make it a winner.

It is understood that the business case for the NMA is weaker than Boeing suggests.  At PNAA a week ago, Boeing’s Randy Tinseth noted that people who question the segment potential size are not thinking outside the box.  Boeing sees a potential market for 4,000 aircraft in the segment.

Bear in mind the 797/NMA will be a family of more than one size.  And its market size (4,000 or less, depending on where you stand) is squeezed by the increasingly capable A321neo from the bottom and the A330neo at the top.  Boeing faces two pressure points: segment size and pricing.

Boeing, we think, cannot afford a “kick the can” middle of the market strategy”:  it has a growth-constrained design in the MAX10. It must, therefore, develop a new aircraft with the associated costs.  Meanwhile, Airbus is tweaking existing designs at a fraction of the cost.

If Hawaiian is really moving to Boeing, there are two considerations.  What kind of deal must Boeing offer to win them back?  And even then, the airline might end up switching away from the 787 for the 797.

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Update on PW Airworthiness Directive

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The emergency airworthiness directive issued Friday for knife-edge seals on Pratt & Whitney GTF engines on the A320neo family covers 43 engines post serial number 777450 that are active in the Airbus fleet.  The AD today has grounded at least 11 aircraft that are equipped with the new model engines, as well as halting deliveries of new engines to the Airbus production line, resulting in additional customer delivery delays.

Because the AD requires “de-pairing” of the affected engine models, engines from those 22 aircraft on which they are installed will likely be transferred to other aircraft in existing fleets to mix impacted and non-impacted engines and avoid the potential for a dual IFSD. This means the AD will likely impact 44 aircraft overall that are currently in service once the de-pairing is completed.  There are currently 113 GTF powered A320neo family aircraft in service with 226 engines, so the AD impacts the most recently delivered 19% of the fleet.

As we obtain more information on the timing of the potential fix, we will continue to update the story.

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EASA Issues New Airworthiness Directive for PW GTF Engines on A320neo Family

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EASA today issued an emergency Airworthiness Directive related to Pratt & Whitney Geared Turbofan engines on A320neo family aircraft.  That AD can be found here,   Apparently, several rejected take offs (RTO) and in flight shut downs (IFSD) have occurred with the PW1127G-JM, PW1127GA-JM, PW1133G-JM and PW1133GA-JM engines having engine serial numbers P770450 or subsequent.

While the root cause is not known, preliminary findings indicate that the affected engines, that had a high pressure compressor aft hub modification that began with serial number 450, are more susceptible to IFSD, which if not corrected could lead to dual engine failure.  Pratt & Whitney indicate that the issue is related to a “knife-edge seal in the high pressure compressor aft hub” and are already at work to find the root cause and fix for that issue.

Emergency operational restrictions called for in the Airworthiness Directive include de-pairing affected engines within 3 flight cycles, and within 1 flight cycle eliminating ETOPS operations for aircraft with 1 affected engine installed.

This Airworthiness Directive presents another blow to the GTF program just as production rates had ramped up to planned levels.  It appears that because this AD impacts newer engines, Pratt & Whitney will need to stop production to modify the current build standard and fix the cause behind the higher than expected IFSD rate.

At this writing, we cannot project how long it will take for Pratt & Whitney to develop a “fix” for the problem, nor the overall impact on A320neo operations with affected customers.  This AD will likely impact about 226 engines on 113 aircraft in service with 18 customers.  It is also likely to impact a few more engines currently on the production lines at Airbus and Pratt & Whitney that will likely need to be retrofit prior to installation on new aircraft, as well as spare engines in inventories.

As we obtain further details, we will update this story.




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Aeroflot places $5bn order for 50 MC-21s

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Aeroflot ordered 50 MC-21s today from IRKUT.  Aeroflot will receive the first jet in the first quarter of 2020, with the full delivery to be completed by 2026.  Under the terms of the order, Rostec, the leasing subsidiary of Aviacapital-Service, will supply the 50 MC-21-300s. These aircraft are to be leased for a term of 12 years, with the option of two-year extensions on the lease no more than three times.

RT reports that the first 25 MC-21s delivered to Aeroflot will have Pratt & Whitney PW1400G engines.  At this stage, we do not know if the remaining aircraft will be equipped with the PD-14 engines, due to be certified later this year.

Aeroflot plans to use the MC-21s to replace its remaining Soviet-era Yakovlev Yak-42, Tupolev Tu-134, Tupolev Tu-154, and Tupolev Tu-204/214 aircraft.  Aeroflot configurations are to carry 169 passengers, with 16 business-class and 153 economy-class seats.  The airline will be using the aircraft on domestic and international routes.

From discussions with IRKUT, we expect to see the MC-21 to offer operating costs around 6-7% lower than its competitors.  Which is a very interesting and exciting data point, numbers which we are in the process of verifying.  Every OEM that has deployed the GTF has seen fuel burn lower than expected and a consequent increase in range.  We expect the same to happen with MC-21.

Vitaly Saveliev, Aeroflot CEO, said: “The signing of a firm order for 50 MC-21 aircraft is a landmark event not just for our two companies, but for our country. Russian manufacturers have created the first next-generation passenger aircraft, marking Russia’s return as a global leader in the aviation industry.  In today’s geopolitical context we believe it is essential that there is competitive Russian-made technology, and that it is of the highest quality and competitively priced.  For this reason, our partnership with Rostec, our largest partner and a shareholder of Aeroflot, is of critical importance.”

Sergey Chemezov, Rostec CEO, said: “This agreement underscores that Russia’s civil aviation industry is making a comeback and taking its place among leading global manufacturers. The MC-21 represents a genuine breakthrough achievement for the aviation industry.  The aircraft uses cutting-edge materials and the latest generation of systems, created by leading Russian companies. Elements of the MC-21 that Rostec produces include titanium and composite parts, onboard electronics, chassis components, other systems, and the ‘heart’ of the aircraft – the PD-14 engine.  We believe that this engine will be selected by Aeroflot as the primary power plant for the MC-21.”

This is a program to watch.  Hopefully, we will see the flight test aircraft Farnborough this year.

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Emirates blinks

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The Airbus A380 has been under a cloud for some time.  The aircraft has many detractors who took this to mean the end was nigh.   Indeed, it was only a few days ago that Airbus sales guru John Leahy remarked: “If we can’t work out a deal with Emirates, there is no choice but to shut down the programme”.  Hopes for a deal with China also seemed to be going nowhere.   The last A380 order came in 2015 with zero in 2016 and 2017 saw two cancelations.  There was evidence that the doomsayers had a point.

Then today, as if by magic, Emirates announced an order.  Watch this interesting video from Bloomberg for context.

A deal between Emirates and Airbus has been cooking in the background for some time.   Emirates’ earliest A380s are going to be retired and the airline’s  appetite for traffic requires an A380 to replace an A380.  Take a look at this Tweet from an EU-based aviation journalist with a picture today on the left and another from the recent Dubai air show on the right.

Airbus and Emirates were close enough at the Dubai air show that a deal was potentially coming.  There must have been sticking points that kept it from going forward.

There are few details on the deal, other than 20 firm plus 16 options, deliveries from 2020 and a list price of $16bn.  The 2020 timeframe gives an idea when the airline starts to retire older models and needs replacements.  The real price is probably closer to 60% less than $16Bn.  To be clear, the definition of what these aircraft are going to be is not set.  Seating, for example, may be quite different from what we see at the airline today.

Today’s order provides Airbus with a pipeline for production to remain in place.  Airbus is committed to keeping the A380 line going.  That works for Airbus because the hope is that by 2020 more airlines will turn to the A380 as a solution for airport congestion and slot constraints.  Airbus has been talking about this and megacities for a while.  Eventually, the scenario will come true because cities don’t want to or can’t grow their airports.  With each slot going up in value, we have to see fewer small jets at big airports and more VLAs.  That just seems inevitable.  Airbus bought some time, even if it comes at a steep price.

For Emirates, this gives them a solution to ensure their growth is supported.  This airline is, by an order of magnitude, the largest A380 operator.  It is more dependent on the A380 than Airbus is.  In the battle of wits between the airline and Airbus, it was a safe bet the airline would capitulate.  But we do not see this as a weak play by Emirates.  The details of the deal will emerge that will show just how much of a deal it managed to secure.  We would be surprised to see these new orders end up being the A380plus. The airline’s president, Sir Tim Clark, has been adamant that he wants an A380neo.  He offered (as the video reminds us) to buy 200 of these if he could get them.

Emirates needs to drive down fuel burn and operating costs on the A380 to ensure they can stay below the A350-1000 and 777-9 that their competitors will deploy while being able to carry over 550 passengers.  Four engines are going to burn more fuel than a twin.  But those four engines work less hard than the two engines on a twin.  Amedeo’s Mark Lapidus explained this before as a point that many miss.  The engine maintenance costs between a super twin and an A380 are similar.

Which brings us to the next phase of today’s deal.  No engine was selected.  That means Airbus and Emirates are going to pressure Rolls-Royce and Engine Alliance to ensure the A380plus is even better than it was projected to be when announced in Paris last year.  Engine Alliance told us they offered Emirates their engine at cost on the last go-round when Emirates came buying.  As the only user of its GP7200, Engine Alliance needs an order even more than Airbus.  But Emirates selected the Rolls-Royce engine for their last A380 order.  The deal offered by Rolls-Royce must have been below their cost.  Buying orders is nothing new in this industry.  The hope is to make up profits from spares.   In 2016 we reported on that deal with some questions about how it went down.

Both engine makers are now going to have to rework their current products to derive even more fuel savings than they envisaged at Paris.  And they have to do this within the next two years.  The GP7200 could see extensive use of GE’s additive manufacturing experience help improve fuel burn.   Rolls-Royce may have some IP from their Trent XWB to push into the Trent 900.  We think the pressure is now off Airbus and squarely on the engine OEMs.

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Premium 2018.1 – EXPECTATIONS FOR 2018

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Welcome to AirInsight Premium content. This page is only available to active members.

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