Sizing up engine market share on the A320 family

While competition between Airbus and Boeing snares nearly all the headlines and all the “sex,” competition for engine orders is less sexy and receives less attention.

Part of this is because of the increasing trend toward sole-sourcing. The Boeing 737 has been sole-sourced by CFM International since the creation of what is now called the Classic series: the 737-300/400/500. Pratt & Whitney believed at the time Boeing was upgrading the 737-200 that airplanes were up-gauging and bet its future on the Boeing 757 size. It was one of the classic corporate blunders of all time.

Shut out of the 737, P&W joined with Rolls-Royce and MTU to build the International Aero Engine V2500 for the Airbus A320 family. IAE came to the table late, giving CFM a solid head start on the program with a variant of the CFM 56 that powers the 737 Classic and later the 737 NG.

IAE trails to this day, but has done a remarkable job of coming from behind. CFM tends to be favored on the A319 and A320 while IAE is the preferred engine on the larger A321. IAE offers more thrust and better economics on the A321 while the CFM has better economics for the smaller Airbuses. CFM’s reliability is legendary and tends to be better than the V2500.

The blog PDXlight has done a marvelous job of dissecting the engine market share of the A320 family for the New Engine Option. We asked PDXlight to do the same exclusively for us for the A320ceo family. The results are below the jump.

First production CSeries reveal March 7; BBD sees Russia as ripe market

Bombardier earnings call today:

CSeries: Bombardier will reveal its first production aircraft March 7, the company said on its earnings call today. First year production will be 20-30 aircraft, and up to 120 a year by 3 1/2 years. BBD is still holding to its first flight target by the end of June, EIS of the CS 100 a year later and EIS of the CS300 by the end of 2014. Pratt & Whitney, BBD and Transport Canada announced certification of the GTF 1500G this week. This is the engine that will power the CSeries.

Russia a ripe market: BBD sees Russia as a ripe market for the Q400, CRJ and CSeries. (And for rail, but we don’t cover rail.) Ilyushin Finance yesterday announced it signed a firm order for 32 CSeries and optioned 10 more. This compares with 10+10 announced in an MOU at the Farnborough Air Show last year. On the earnings call, BBD said the Q400 already is operating in Russia and has proved to be a good cold-weather airplane there. CRJ-200s, which have fallen out of favor in the USA, are being remarketed in Russia with success.

American/US Airways, SkyWest and United targets: These three airlines are major targets for RJ sales campaigns this year.

Program Accounting: “Boeing averages the costs over 10 years. We don’t do that. We take the real price and the real cost.”

Unrelated:

Politico has an article on the impact of Sequestration on the air travel industry: long lines at security, delays on the tarmac.

The famed Airbus “5th Quarter”–huge LionAir buy reported

We talked about this a month of more ago: the prospect LionAir would order 100 Airbus A320 family aircraft. Today (or was it yesterday, in Asia?) comes this report that LionAir signed an order in December for as many as 220 A320neos (with PW GTF engines, we understand).

Through November Airbus recorded a net of 585 orders, compared with Boeing’s year-end total of 1,200. Reuters believes Airbus will end 2012 with around 900 orders.

LionAir has been exclusively a Boeing customer.

Update, Jan. 10: Avolon (a lessor) announced today it signed an order for 20 additional A320s in December.

Embraer selects PW GTF for E-Jet RE; concept clarity comes at last

It’s official: Embraer selected the PW GTF to re-engine the E-175, E-190 and E-195.

In doing so, it looks like the E-170 will be allowed to wither on the vine.

This is a huge win for PW and setbacks for Rolls-Royce, which sorely wanted to win the E-Jet RE for its Advance 2 RR development; and for GE, the incumbent supplier of the CF34 and which was developing the Next Generation variant for the E-Jet.

It’s yet another validation for the GTF. Versions of this engine will power the Mitsubishi MRJ, the Bombardier CSeries, the Irkut MS-21, the Airbus A320neo family and now the E-Jet RE.

It’s a huge comeback for PW, which made a major strategic error in not competing to power the Boeing 737 300/400/500. Boeing continues to use the GE/CFM LEAP engine as its sole-source supply for the 737 MAX, though Boeing seriously evaluated the GTF as well.

Below is EMB’s press release:

Embraer Selects Pratt & Whitney’s PurePower Engines for Second Generation of E-Jets

São José dos Campos, January 8, 2013 – Embraer SA (NYSE: ERJ; BM&FBOVESPA: EMBR3) announced today that Pratt & Whitney´s PurePower® Geared Turbofan^TM engines have been selected for its future, second generation of E-Jets, with entry into service planned for 2018. The decision is an important milestone in the program, which is expected to be officially launched later this year.

The new engines – the PW1700G and PW1900G – range in thrust from 15,000 to 22,000 pounds. In combination with new aerodynamically advanced wings, state-of-the-art full fly-by-wire flight controls and other systems evolutions, they will result in double digit improvements in fuel burn, maintenance costs, emissions and external noise.

“We are very happy to expand our partnership with Pratt & Whitney, keeping the E-Jets family as the best solution for our customers, today and in the future”, said Frederico Fleury Curado, President & CEO of Embraer. “The PurePower GTF engines are a great fit to the next generation of our E-Jets and we look forward to another long lasting and successful program with Pratt & Whitney”.

“We are proud that Embraer has recognized the unmatched value of the PurePower engine, and we are committed to supporting a successful launch of the new E-Jet aircraft family,” said Pratt & Whitney President David Hess. “To date, Pratt & Whitney has completed more than 4,200 hours and 12,400 cycles of full engine testing for the PurePower engine family, demonstrating the benefits and reliability of the engine architecture.” Pratt & Whitney is a division of United Technologies Corp. (NYSE: UTX).

The second generation of E-Jets will be a significant step in Embraer´s commitment to continuously invest in this line of commercial jets, complementing a series of ongoing improvements currently being implemented in the existing family, with great benefits to its customers. Embraer´s objective is to offer the best product and maintain its leadership in the 70 to 120 seat market.

Looking ahead to 2013 in Commercial Aviation

Last year yielded a few surprises in an otherwise predictable year.

Jim Albaugh shocked the aviation world when he retired unexpectedly at age 62. He was expected to remain in his position as CEO of Boeing Commercial Airplanes until mandatory retirement at 65.

EADS CEO Tom Enders unleashed a surprise merger proposal with BAE Systems. The deal didn’t work due to German government opposition, but he ultimately accomplished a governance restructuring—a key objective of the merger—that will reduce government meddling in the future.

Those were about it. Boeing’s much-anticipated Authority to Offer the 777X didn’t happen. ATO for the 787-10 was stealthily granted. Airbus and Bombardier, to no surprise, delayed the A350 and CSeries by a few months. Boeing came roaring back to become sales leader for the first time in about a decade, on the strength of 737 MAX sales.

What’s ahead for 2013? Here’s what we see.

Overview

With the spurt of 737 MAX sales over, narrow-body sales competition between Airbus and Boeing should return to normalcy. Will twin-aisle sales become the next growth market because of the first flight of the A350 and the program launch of the 7870-10? Will ATO of the 777X evolve into a program launch as well? Will Bombardier’s first flight of the CSeries and subsequent testing validate its claims for the new technology airplane and finally spur a large number of sales of the “show me” crowd?

Here’s our OEM-by-OEM rundown.