Sunday, May 29, 2016

Boeing mulls larger engine for biggest 737 MAX -sources

Boeing is considering a plan to put a larger engine on its biggest narrow-body airliner in an effort to blunt the runaway success of a rival Airbus jet that outsells it by four to one, industry sources said.

The U.S. plane-maker would offer a modified version of the larger and more powerful LEAP-1A engine used on Airbus's A321neo rather than the LEAP-1B used on the 737 MAX 9, they said.

That would enable Boeing to add range while lengthening the 178-seat jet to fit 12 or more extra passengers and gain a capacity advantage over the 185-seat A321neo, the sources said.

Boeing disputes its rival's claims about the strength of demand in this niche where Airbus has the strongest lead. But leapfrogging Airbus's A321neo offering with more seats would hedge Boeing's position as many airlines opt for bigger planes.

However, the new derivative version of the 737 MAX 9, nicknamed 737 MAX 10, would bring significant headaches.

Adding the larger engine would mean raising and possibly repositioning the landing gear and recertifying parts, costing an estimated $1-2 billion, according to industry experts.

Boeing's 737 MAX family uses the smaller LEAP engine partly because its fuselage sits lower to the ground and must therefore have a smaller engine fan.

Having a different engine on the largest 737 could weaken the advantage of commonality with the smaller LEAP used on the rest of the 737 MAX fleet, but reflects a growing pragmatism in the face of lost sales.

"It doesn't matter if they are not consistent," said Adam Pilarski, senior vice president at U.S. consultancy Avitas. "They are getting killed."

The maker of the LEAP engines, CFM, which is co-owned by General Electric and France's Safran, declined to comment. A GE spokesman said there was no contractual impediment to using a larger engine for Boeing.

"The LEAP engine was designed to have growth capability," he said.

Boeing Commercial Airplanes CEO Ray Conner said this month Boeing was studying several options for developments and had made no decisions, but would support value for shareholders.


Recent orders by Vietnam start-up airline VietJet illustrate the Airbus-Boeing fight for narrow-body sales. At last November's Dubai Airshow, Airbus celebrated the sale of 30 A321s to VietJet, while Boeing officials watched from the sidelines.

But last week Boeing pulled off what industry observers saw as a coup by signing an $11 billion order for 100 737 MAXs with the same airline in the presence of President Barack Obama.

Boeing's plans to offer a larger MAX are one option being considered to defend its 737 franchise as it also tries to carve out a space in the middle of the market between the workhorse narrow-body 737 and big wide-body jets like the 787 Dreamliner.

Stung by Airbus's gains in orders, Boeing is pondering a mixed bag of tactical and strategic moves that, if fully made, could give it a head start in the development of the next generation of jets for production from about 2030.

Narrow-body medium-haul jets like the 737 and A320 family dominate the market by volume, with Airbus forecasting 22,900 deliveries worth $2.2 trillion over the next 20 years.

While both have sold thousands of the jets to airlines eager to cut fuel costs, Boeing's share of the market for such jets has fallen to 40 percent compared with a usual 50-50 split.

Market sources say Boeing has shown increasing willingness to compete aggressively for Airbus customers in order to claw back market share, as was evident in the VietJet deal.

"We expect to see lower pricing from Boeing on the MAX," Stuart Hatcher of valuation firm IBA told a briefing.

Boeing's tactical tinkering with the 737 also includes tweaking a smaller model to suit two key buyers. And the company's aim extends to a strategic 'middle of the market' jet, partly to replace its popular 757.

Industry sources say that project involves not one jet but two. They would have twin aisles and carry 220 and 260 people respectively, equating to what analysts see as two distinct slices of potential demand.

The smaller base model would have a range of about 4,500 nautical miles, dropping to about 3,500 for the larger variant.

Airbus has dismissed the idea, which would partially overlap with its A321neo. It is expected to tell media at briefings this week that the history of the market is littered with small twin-aisle jets that sold poorly, including its own A310.

But it is holding in reserve a plan to retaliate with another A321 makeover, using new wings to boost performance.

Boeing declined comment on either tactical plans to defend the 737 or the longer-term mid-market studies. At $15 billion or more, it has said the latter is a difficult business case.

"We're in continuous discussions with our customers about the market. We'll make the right decisions at the right time," a spokesman said.

While Boeing's mid-market study is grabbing most industry attention, behind it lies a longer-term bid to turn the tables on Airbus in the broader market for smaller jets where both make most cash, according to industry analysts.

Although differing in size and appearance, a mid-market jet would spawn new technology and production methods that could be transferred to whatever comes after the 737, they said.

(Tim Hepher and Alwyn Scott - Reuters / Yahoo Business News)

Thursday, May 26, 2016

Boeing made a 'major mistake' 12 years ago that left its customers in the lurch

The 757 was always a bit of an odd duck for Boeing.

It's a twin-engine narrow-body airliner that's larger than the run-of-the-mill 737, but smaller than wide-body jets like the 787 Dreamliner.

It's a true tweener in Boeing's lineup.

Though the Renton, Washington-based plane maker booked more than 1,000 orders for the jets over its two decades in production, it was never a hot seller.

By the early 2000s, sales of the 757 had all but dried up, and Boeing put the plane out to pasture in 2004.

But a decade later, airlines have come to understand that the 757's odd-ball tweener nature has translated into incredible flexibility. It generates profits both in short-range domestic flights and on long-haul trans-Atlantic ones.

"It is the most effective and best single-aisle airplane around," La Compagnie founder and CEO Frantz Yvelin told Business Insider. "In the business, we used to call it the workhorse."

The startup boutique French airline operates a pair of the planes, each decked out with 74 business-class seats.

However, as the 757s grow older, airlines are looking for an effective way to replace them, and right now they don't seem to have any they like.

"Boeing 'made a mistake"

Last year at the Paris Air Show, rumors of a 757 replacement known as a "middle of market" jet became one of the big stories to emerge from the show. Boeing, though, doesn't have concrete plans yet for a new middle-of-market jet. Despite the apparent need from airlines, the carrier says the economic case doesn't exist yet.

In statement to Business Insider, the company said:

There isn’t a set timeline for a decision. We continue to talk with our customers and evaluate the best low-risk solution around production system architecture, technologies and market needs for any new development programs. There are no firm plans at this stage but we constantly assess where the market is and where our customers are going. Overall the 737 MAX family with multiple models, is very well positioned to offer a network solution to meet the industry’s single aisle addressable demand.

Yvelin does not think Boeing made right move by abandoning the jet.

"I think Boeing made a big mistake stopping the production of the 757," the CEO said.

Instead, Yvelin — who has founded two separate airlines that operate 757s exclusively — believes Boeing should have stuck with the plane and developed updated versions with new wings and engines like Airbus has done with the A320 and A330.

Yvelin sold his first airline to British Airways in 2008.

"I know a lot of people at Boeing, and I believe they are regretting their decision," Yvelin added. "Perhaps one day they will do a true successor to the 757."

Currently, the closest either Boeing or Airbus can come to a replacement for the long-serving jet are the 737MAX9 and A321neoLR. Both planes are stretched and updated versions of aircraft designed for other missions and adapted to fill the 757's role in the lineup.

As a result, neither can truly match the 757's range and performance. And so Yvelin sees them at best as partial replacements.

Since there isn't a ready-made replacement for the 757 available today, Yvelin expects La Compagnie to keep the planes around until 2021.

His airline is in talks with both Airbus and Boeing to acquire new A321s or 737MAX9s to supplement its 757s.

Certainly, a tiny airline like La Compagnie would never justify Boeing doing anything like building a new jet (or even restarting production of an old one).

But major 757 operators such as American, Delta, and United face the same issue — on a much larger scale. With their fleets of 757s close to 20 years old, all three airlines have indicated that they are looking for a long-term replacement and that they have no desire to retire the jet.

Delta Air Lines CEO Ed Bastian told local media in Seattle this month that he is "absolutely" interested in a middle-of-market jet from Boeing.

In the meantime, they plan to keep their 757s in operation for now. Delta, the 757's largest operator with nearly 130 in its fleet, has even refurbished their planes with brand-new interiors.
No economic case

Building a new middle-of-market jet from scratch would cost tens of billions of dollars and years of development time. According to the airplane maker, that economic case doesn't exist at the moment.

Boeing's marketing chief Randy Tinseth told a group of aviation financiers in February that a middle-of-market jet doesn't quite make sense for the company at the moment, Reuters reported.

Instead, the Boeing believes that the heart of the single-aisle jet market is with the smaller 737MAX8 and A320neo-sized planes. "Boeing's product has the clear advantage in this space," a company spokesperson said in a statement.

But that's really beside the point. Although the Boeing does offer a pseudo replacement for the 757, airlines aren't buying it. Boeing has a robust 3,200 order backlog for the 737MAX line of jets, but only a small number of them are MAX9s.

The company does not publicly break down the sales of the individual MAX variants. However, data from Flightglobal indicates that Boeing has sold only 224 of the planes. According to Airbus, it has 1,117 orders for the rival A321neo. This means that Boeing is being outsold 5-to-1.

If that trend continues, the business case for a 757 replacement may become a lot more enticing for Boeing.

(Benjamin Zhang - Business Insider)

Wednesday, May 25, 2016

Memorial Day last-minute deal: Hop a private jet from Burbank to Las Vegas for $129

JetSuiteX passengers take Embraer 135 jets from Bob Hope Airport in Burbank.
 (Cean One Studios)

Embraer 135 jets that seat 30 passengers depart from Burbank’s private Hangar 2, with valet parking just steps away. (Clean One Studios)

If you’re considering a last-minute trip to Las Vegas this Memorial Day weekend, a small, luxury jet may get you there for less money and less hassle.

Irvine-based JetsuiteX is launching service between Burbank Bob Hope Airport (BUR/KBUR) and McCarran International Airpot (LAS/KLAS). It's part of a larger charter service called JetSuite.

The difference is that JetSuiteX allows you to book one seat rather than the entire plane. The inaugural flight departs Burbank at 8:50 a.m. Thursday morning

The service will operate three scheduled flights Sunday through Friday (Saturday service is limited) with fares starting at $129 each way, excluding taxes. There are no membership fees either; that's the entire price you pay. Regular fares between Burbank and Las Vegas typically range from $77 to $300 each way. (JetSuiteX also flies between Burbank and Concord, Calif., in the Bay Area.)

An added bonus? No long TSA lines at small airports.

"We’re trying to bring speed back to aviation," Chief Executive Alex Wilcox says. He pointed to statistics showing that 1 million fewer passengers now fly annually between L.A. and Vegas than in 2000. Wilcox attributes that to rising fares and long waits at busy airports.

During roughly the same period, according to Wilcox, traffic on Interstate 15 at the California-Nevada state line increased by half-a-million cars a year.

"If it’s literally five hours to Vegas, whether you fly or drive, then what’s the point, right?" he says. "[With JetSuiteX], you can actually fly it in an hour and a half from the time you hit the airport to the time you hit the hotel room."

"You can show up 15 minutes ahead of time and get on the airplane without breaking a sweat," he added. With fewer passengers, Wilcox said the line at airport security screening moves quickly.

And the private terminal in Las Vegas where you land is convenient too. Passengers arrive in Sin City at Atlantic Aviation's private terminal along Tropicana Avenue, less than five minutes from the MGM Grand Resort.

The jets feature electrical outlets, free Wi-Fi, complimentary drinks (including alcoholic beverages) and plenty of legroom. JetBlue fliers earn TrueBlue loyalty points on these flights too.

"It’s an airliner that thinks it’s a private jet," Wilcox says. "You have 36 inches of pitch to every row, and 40 inches at the exits. I’m 6-foot-1 and I can cross my legs in any row of the airplane."

Those $129 fares for last-minute travelers are a great price.

As a comparison, one-way fares on Friday from Bob Hope to McCarran start at $264 on American Airlines according to a Tuesday search on

(Jay Jones - Los Angeles Times)

Air Austral joins Boeing's Dreamliner club

Air Austral Boeing 787-8 (34510/22) F-OLRC rolls for takeoff from Boeing-Paine Field (PAE/KPAE) on May 23, 2016 on it delivery flight to the carriers home on Reunion Island.
(Photo - Boeing) 

Air Austral is the latest carrier to join the Dreamliner club.

The airline, based in the French Indian Ocean island territory of Réunion, took delivery of its first Boeing 787 Dreamliner on Tuesday at the jet-maker's delivery center in Everett, Wash. The aircraft was scheduled at land at the Roland Garros Airport in Saint-Marie, Reunion Island, on Wednesday after the 10,500-mile delivery flight from Everett.

Air Austral’s Dreamliner order is a small one. Tuesday's delivery marked the first of two scheduled to go to the carrier as part of a 2015 order. Air Austral CEO Marie-Joseph Male says the airline will use its Dreamliners for nonstop service to
Paris Charles de Gaulle airport from Mayotte, another of France’s island territories in the Indian Ocean.

"It is an honor to deliver the first 787 Dreamliner to Air Austral, a first for a French operator," Van Rex Gallard, Boeing’s VP for commercial sales Latin America, Caribbean and Africa, says in a statement. "The Dreamliner will complement Air Austral's growing long-haul fleet, made up of 777s and now a 787, as well as its trans-continental network to Europe and Asia."

Industry followers may recall Air Austral was the carrier that made headlines in 2009 when it said it would buy two Airbus A380 superjumbos and configure the double-decker jet in an 840-seat all-coach configuration.

Air Austral, which would have been the first to outfit the A380 with such a layout, has since abandoned the idea. Its orders were officially canceled earlier this year.

Air Austral was founded in 1975 and currently operates a fleet of nine aircraft to over 10 destinations worldwide.

(Ben Mutzabaugh - Today In The Sky / USA Today)

New U.S. Navy Transport Osprey Will Reach an Insane 280 Miles Per Hour

(U.S. Navy)

The Navy is in the early stages of building its own variant of the V-22 Osprey tiltrotor aircraft to perform its critical Carrier-Onboard-Delivery mission to delivery forces, supplies and weapons to forward-stationed ships at sea.

The service plans to procure 44 new CMV-22B Ospreys for the COD mission, replacing the 1960’s era C-2 Greyhound aircraft. The C-2 Greyhound is a twin-engine, high-wing cargo aircraft first introduced in the 1960s. Since that time, 35 C-2s have been in the Navy inventory, service officials said.

Unlike the C-2 fixed wing aircraft, which requires a catapult to lift off of the deck of a carrier, the Osprey tiltrotor can both reach airplane speeds of 220mph and also hover like a helicopter such that it can come in for vertical landings on the carrier deck.

“280mph is the maximum speed,” Rick Lemaster, Director for Business Development, Bell Boeing, told Scout Warrior in an interview.

The Navy has contracted Bell-Boeing to develop the engineering changes needed to meet this range requirement, as well as the other changes, to enable the CMV-22B to fulfill Navy's COD mission.

New Technologies for the Navy Osprey

The new Navy Osprey variant will be engineered with some new technologies and additional fuel carrying capacity to achieve a longer range than the existing MV-22 Marine Corps Osprey, however the Navy and Bell-Boeing are taking special measure to maximize commonality between the two services’ variants.

“Bell-Boeing will examine various methods to meet the range requirement, including additional fuel and how to carry it. The solution will be incorporated as a "cut-in production" engineering change to the MV-22B, producing the CMV-22B,” Navy spokesman Ensign Marc Rockwellpate told Scout Warrior.

The Navy’s Osprey will add more than 200 miles to the Nautical range of the existing Corps' variant of the aircraft in order to extend its reach out to sea on-board aircraft carriers and amphibious assault ships.

“The Navy's operational range requirement for the Carrier Onboard Delivery mission is 1,150 nautical miles. This is required to provide long range aerial logistics support of the Seabase, and reflects an increase of approximately 200 nautical miles to the baseline MV-22B,” Rockwellpate said.

The new Osprey, slated to first be operational by 2021, will perform the full range of missions currently executed by the C-2s. This includes VIP transport, humanitarian relief mission and regular efforts to deliver food, spare parts and equipment for sailors aboard carriers. Also, C-2 aircraft has a reconfigurable cargo bay which can create space for 12-stretchers for medical evacuation and transport.

The existing Corps MV-22 Osprey is also known for what is called "mounted vertical maneuver" wherein Marines use the speed, range and maneuverability of the Osprey to fly in behind enemy lines, land vertically and conduct a range of operations, including assisting amphibious missions.

The Osprey can transport Marines, equipment and weapons systems with a combat radius of 450 miles. The new, in-development Navy variant will extend this combat radius to allow for ocean transport of supplies, equipment and weapons to assets on the open seas far from shore. The aircraft can also move important cargo between ships such as carriers and amphibs.

In addition, the Osprey is being developed as a tanker aircraft able to perform aerial refueling missions; the idea is to transport fuel and use a probe technology to deliver fuel to key aircraft such as an F/A-18 or F-35C.

The first Navy Ospreys will be procured in 2018 with some early “long-lead” items acquired in 2017, Lemaster said.

Some of the requirements for the new aircraft have already been established, there are other still in the process of being determined and refined.

“The Navy Osprey will have increased range and we are still working toward the engineered changes that will give them all the requirements and range they are looking for,” Brian Roby, Bell Field Manager, San Diego, told Scout Warrior in an interview.

While the Navy’s aerial delivery mission does not require an armed aircraft, there will be occasions which require the aircraft to operate from forward bases in a higher threat environment, Rockwellpate said.

The Marine Corps, however, is in the early stages of determining requirements to arm their MV-22 Osprey with rockets or other kinds of weapons.

“In order to decrease this risk, the CMV-22B will retain the MV-22B's survivability systems, which include a missile warning system as well as chaff and flares,” Rockwellpate explained.

The CMV-22B will also be configured with a high frequency radio to provide a redundant "Beyond line of Sight" safety of flight communications capability, reducing risk during long-range over-water flights to an underway Carrier Strike Group, he added.

“They are looking at all the requirements still. It’s going to have as a minimum as 400 cubic feet. What we have is about 439 cubic feet,” Roby said.

Also, in order to successfully perform the long-range aerial logistics support mission, the CMV-22B must be interoperable with US and international civil aviation and military air traffic management systems.

In preparation for these developments, the Navy’s Atlantic Fleet completed a military utility assessment several years ago wherein they conducted Osprey flights from Mayport, Fla., and Norfolk, Va., to the USS Harry Truman out at sea.

The idea for the flights was to assess the viability of the V-22 Osprey to perform COD missions to and from the deck of the aircraft carrier, Navy officials said.

(Kris Osborn - The National Interest)

Wednesday, May 18, 2016

Northrop Grumman wins KC-10A engine overhaul contract

(USAF Photo by Heide Couch)

Northrop Grumman has won a contract valued at $17.5 million to four engine overhauls in support of the United States Air Force (USAF) McDonnell Douglas KC-10A "Extender" fleet.

The work will be performed in Vancouver, Canada and is scheduled to be completed by April 2018.

(Geoff Ziezulwica - UPI News)

A Boeing 787 Dreamliner vs. Airbus A350 Showdown Is Looming in the U.S.

Boeing's 787 Dreamliner and Airbus' A350 have both sold well in the U.S. so far. And American Airlines, Delta Air Lines, and United Continental will need to order a whole lot more in the coming years.

This raises the stakes for upcoming wide-body fleet replacement decisions at all three U.S. legacy carriers: American Airlines, Delta Air Lines, and United Continental.

Sales slow for Airbus and Boeing

Between 2004 and 2007, Boeing secured 817 net orders for its revolutionary 787 Dreamliner. In the next eight years combined, it accumulated just 325 net orders, with only one year of 100-plus orders and three years with more Dreamliner cancellations than orders.

It's a similar story for the Airbus A350. Airbus recently boasted that it has nearly reached 800 firm orders for its A350 family. What Airbus failed to mention is that it had reached that milestone back in 2013, but has had more cancellations than orders since then.

Neither company is in dire straits right now. Boeing and Airbus have more than 750 unfilled orders for the 787 and A350, respectively: enough to support years of production. Nevertheless, if order rates don't pick up in the next few years, Boeing and Airbus won't be able to go ahead with planned production increases.

U.S. airlines still need more wide-bodies

American Airlines, Delta Air Lines, and United Continental are each in the early stages of major wide-body fleet renewal projects. All three carriers have dozens of wide-bodies on order.

Despite these bulging order books, American, Delta, and United will likely need to order more wide-bodies within the next few years. That's largely a consequence of the aircraft order binge that swept the U.S. airline industry in the late 1990s. Planes ordered then will reach retirement age during the 2020s, driving a big replacement cycle.

More Dreamliners for United: A350s too?

United Continental is in the midst of receiving 51 787s from Boeing. (At one point, the order totaled 65 planes, but since early 2015 United has swapped 14 orders for the larger 777-300ER.) Five years ago, United planned to use most of these 787s to replace retiring 767s.

Instead, United has taken advantage of the low fuel price environment to keep its 767s flying. By the end of 2016, United will have received 30 Dreamliners without retiring a single 767.

Nevertheless, United will need to retire these 767s in the next decade or so. The oldest are already 25 years old, while even the youngest are 14 years old. The Boeing 787 is by far the best 767 replacement available, so Boeing has a good chance of getting 30-40 more orders from United over the next few years.

United Continental also has 70 Boeing 777s that were delivered between 1995 and 2002. These planes will start to reach retirement age in five years. Some of United's 787-10 and A350 orders will replace its 777s. Nevertheless, United will probably need to order several dozen more medium-large widebodies to fill this need. The choice between the 787 and the A350 may ultimately come down to pricing.

Delta also needs a 767 replacement

In late 2014, Delta ordered 25 A330-900neos and 25 A350-900s to jump-start its wide-body fleet renewal. It also has a long-standing order for Boeing 787s on the books, but it has the right to cancel this order -- and many analysts expect it to do so.

Of the planes it has on order, Delta has earmarked the A330-900neos to replace its aging 767-300ER fleet. Delta has 58 767-300ERs, which are 20 years old, on average. It also has another 21 767-400ERs that are 15 years old, on average.

Delta has been known to keep aircraft in its fleet longer than other U.S. airlines. It has also been opportunistic about buying cheap used airplanes at times to meet its fleet replacement needs.

However, if Delta decides to replace its remaining 767s with new aircraft, Boeing will have the inside track again. The A330-900neo and A350-900 will each hold about 300 seats in Delta's configuration: far more than a Boeing 767. The 787-8 or 787-9 would work better for routes with less demand. Airbus' offering in that segment of the market, the slow-selling A330-800neo, isn't nearly as capable.

American Airlines needs more wide-bodies, too

Finally, American Airlines has aggressively replaced older aircraft in recent years, but it will still need to order more wide-bodies a few years down the road. At the end of Q1, American had 49 outstanding orders for Boeing 787s and A350s: enough to replace 23 767s and 9 A330s that will retire between now and 2018 while also supporting some growth and additional replacements in 2019 and 2020.

American currently plans to keep 17 Boeing 767s beyond 2018. Yet even the youngest of its 767s will be 15 years old by then. American will probably retire these planes by the early 2020s, based on its decision not to extend its new international premium economy class to the 767 fleet.

Additionally, most of American's 47 Boeing 777-200ERs were delivered between 1999 and 2001. These planes will probably be retired in the mid-2020s. The 787-10 and the A350-900 are both good replacement options in this size range. Given that American has outstanding orders for both 787s and A350s, it could go either way.

In the meantime...

American Airlines, Delta Air Lines, and United Continental are likely to wait a few years to see how their fleet needs evolve before placing major follow-on orders for the 787 or A350. This year's big contest between the 787 and the A350 is for a long-awaited order of 50-70 jets from Emirates Airline.

But ultimately, U.S. airlines are likely to need hundreds more planes in the 787 and A350 size classes within the next 10-15 years, assuming relatively modest growth. That will help Boeing and Airbus keep their production lines busy beyond 2020.

(Adam Levine-Weinberg - The Motley Fool)

Embraer Cries Foul Over Delta C Series Deal, But It May Be More Commercial Than You Think

Embraer may ask the Brazilian government to file a complaint with the World Trade Organization (WTO) over government support for Bombardier (BBD) for its C Series. The impetus is the deal with Delta Air Lines, which ordered 75 CS100 and optioned 30 more.

The government of Quebec, the province in which Bombardier is headquartered, already agreed to invest US$1bn in the C Series, though it still hasn’t been funded. The Canadian federal government has been asked for another US$1bn, but so far the Feds and BBD officials haven’t been able to reach agreement.

BBD says the Quebec money, and, if it ever comes, the federal investment, will comply with WTO rules. This, of course, remains to be seen. The C Series was already the beneficiary of government funding for “launch aid;” Quebec and Northern Ireland (where the wings are made) ponied up about a third of the original estimated development cost, in keeping with WTO caps. Whether the extra $1bn, or $2bn, is compliant is another question.

Did government money affect Delta deal?

The source of the Embraer (EMB) complaint is the Delta deal. Embraer not only lost the prospect of selling new airplanes to Delta, the airline said it would not induct into service 20 used E190s it agreed to purchase from Boeing Capital Corp., which was part of a deal for new 737-900ERs. BCC took the E190s in on trade from Air Canada in connection with a 737 MAX order.

Delta is going to fulfill its contract to buy the used E190s from BCC. It just won’t put them into service. This leaves open to question just what Delta will do with the airplanes: sell them, lease them or dismember them for parts as a piece of its Delta TechOps maintenance, repair and overhaul business for third parties. Regardless, EMB was proud when Delta announced the BCC deal, since it added Delta as an Embraer operator and Delta is…Delta.

The C Series deal squashed the EMB deal. EMB thinks the government aid may have been crucial to winning the deal, perhaps in a way that is non-compliant with WTO rules.

No one except the parties directly involved know the contract price for the C Series. Market intelligence suggests the nominal airplane price may be between $25m and $30m, with it likely at the lower end of this range.

BBD announced a special charge in connection with this transaction, and those with Air Canada and AirBaltic, of US$500m. But this has more to do with unit accounting and learning curves rather than necessarily pricing C Series at a loss.

Other economic considerations

Airplane contract prices are only one element of a deal. There are integration costs of a new fleet type. There are pilot training costs. There are maintenance training costs. These are all areas where the manufacturer can provide credits or discounts.

Then, in the case of Delta, there’s its TechOps profit center. It’s not uncommon for manufacturers to strike deals with MRO subsidiaries to license MRO capabilities to these companies for third party maintenance. Lufthansa Technik, the MRO operation for Air France-KLM and others have so benefitted.

Delta TechOps may well be a party to the C Series deal. BBD and engine maker Pratt & Whitney, which provides the engines for the C Series, could well have stepped up to the party. The overall economics of such a “global” deal may have been more important than any government aid.

But this is all just my speculation, based on a long-held understanding of the dynamics of aircraft/engine transactions.

Cutting the price

That BBD was likely sporty on its contract price with Delta is a safe bet. But our analysis as Leeham Co. concludes that the US$3.2bn program write off last year shaved $5m off the price of the airplane. The cost-cutting Transformation Plan may shave another $2m off costs by the time Delta is ready to take delivery.

Is the government aid to BBD an unfair advantage? I’m not about to go there, trying to decipher the byzantine rules of the WTO. But I doubt this would be the reason BBD won Delta.

(Scott Hamilton - Forbes)

Alaska Airlines wants to replace Southwest Airlines as California's go-to airline

Executives at Southwest Airlines like to joke that they run a California airline, based in Texas.

For good reason. The Dallas-based carrier flies more passengers in and out of California each year than any other airline, thanks primarily to a dominance in midsize cities including Burbank, San Diego, Oakland and San Jose.

“We have never fallen out of love with California,” said Andrew Watterson, Southwest's vice president of network and revenue.

But there is a new suitor for California fliers.

The parent company of Alaska Airlines is rushing forward with a $2.6-billion deal to acquire Virgin America in hopes of becoming the predominant airline of the Golden State — and the entire West Coast.

“Right now we are not your go-to airline if you live in California,” said Joseph Sprague, senior vice president for communications and external relations at Alaska Air Group. “We plan to change that.”

The deal sets up a David-and-Goliath battle to reign supreme in California, one of the nation’s most lucrative travel and tourism markets and home of 39 million potential fliers.

The competition could be good news for California travelers because both airlines are expected to fight for passengers with low fares, convenient routes and better departure times.

“If we see more competition emerge, that is a good thing for the travelers,” said Henry Harteveldt, an airline and travel analyst for Atmosphere Research Group in San Francisco.

Southwest is usually the best deal in California air travel.

On the state's busiest airline route between Los Angeles and San Francisco, traveled by nearly 2 million passengers each way a year, Southwest's lowest fare is a bit more — about $140 round trip for the cheapest tickets — than competitors Virgin America, American Airlines and Delta Air Lines, which offer round-trip economy seats for as low as $137.

But Southwest's ticket price includes two free checked bags and there are no fees to reschedule a flight. The other airlines charge $25 for the first checked bag; double that for round trip. Rescheduling could cost a traveler up to $200 a ticket.

Still, Alaska and Virgin America have weapons beyond price in the battle against Southwest.

Virgin America flights add cool ambiance and friendly service plus a high-tech onboard entertainment system that makes flying fun and relaxing, veteran air travelers say.

John Riddle, an advertising producer from San Francisco, has been flying Virgin America for about six years and said he would rather pay extra to fly Virgin America over Southwest.

On Virgin America, he said, he can order food from the seat-back entertainment system and plug his laptop into the in-seat power outlets -- features not found on Southwest.

"Once I fly them, every other airline seems bland,” Riddle said.

Those kind of features helped Virgin America win "best domestic airline” in Condé Nast Traveler’s readers’ choice awards for the last eight years, among other honors.

Alaska is also known for good passenger service, having been the highest-ranking traditional airline for nine straight years in the J.D. Power airline satisfaction study.

Alaska also has the only loyalty reward program in the industry that offers awards based on miles traveled. Most other airlines have shifted to a rewards program based on dollars spent.

“You have one well-liked airline buying another well-liked airline,” said Seth Kaplan, managing partner for the trade magazine Airline Weekly.

But Southwest fires back, saying it flies to nearly 100 large and midsize airports across the country and remains the only major U.S. carrier to charge no fees to check the first two bags.

“We don’t nickel-and-dime people,” Watterson said.

Celebrity billionaire Richard Branson launched Virgin America in 2007 with a plan to offer Hollywood executives, Silicon Valley entrepreneurs and other California fliers high-tech amenities, mood lighting, and hip drinks and snacks. But Virgin America, based in Burlingame, Calif., operated in the red for the first several years, reporting its first profitable year in 2013.

Seattle-based Alaska Airlines, a no-frills carrier known for the smiling Eskimo logo on the tail of its planes, now dominates in the Pacific Northwest, where it is the largest carrier in Seattle, Portland, Ore., and Anchorage. By acquiring Virgin America, Alaska can take over Virgin America’s airport gates at Los Angeles, San Francisco, San Diego and Palm Springs.

As a team, Alaska and Virgin America have a long way to go to overtake Southwest in California.

Alaska and Virgin America combined fly about 17 million passengers a year in and out of the state, compared with about 47 million for market leader Southwest, according to federal statistics. Alaska and Virgin America also would need to push past the carriers that currently are second and third in the passenger race, United and American, respectively.

At Los Angeles International Airport, Alaska and Virgin America combine to serve about 8.5% of the passenger traffic, compared with 11.5% of the total traffic for Southwest.

Southwest has 10 gates at LAX. Alaska operates six passenger gates, plus three more it shares with Delta. But the airline will pick up another six gates from Virgin America after the acquisition.

“Alaska is going to be quite a significant player at LAX,” Harteveldt said.

Alaska and Southwest are not the only airlines courting California fliers.

New York-based JetBlue Airways, which was outbid by Alaska to acquire Virgin America, plans to add its popular “Mint” service to several transcontinental routes in the next few months, including flights from San Francisco and San Diego.

The Mint service, favored by Hollywood VIPs and Silicon Valley executives, includes extra roomy, lie-flat seats, complimentary Wi-Fi, onboard entertainment and tapas-style food from New York restaurant Saxon + Parole. Flying across country in a JetBlue Mint-service seat can cost more than three times the price of a standard seat.

Before Alaska can do battle with Southwest, the airline must complete its acquisition of Virgin America and decide whether to absorb Virgin America’s 60 planes and 3,000 employees into Alaska’s operations or keep the two airlines separate. Alaska has about 11,000 employees and a fleet of 153 planes.

Sprague said a complete integration of the two airlines under Alaska Air Group could take up to 12 months. Many industry experts agree that the acquisition won’t trigger antitrust protests from the Justice Department.

The deal means that Alaska can take over Virgin America’s lucrative transcontinental routes from LAX to New York’s John F. Kennedy International Airport, Ronald Reagan Washington National Airport and LaGuardia Airport.

But Kaplan of Airline Weekly points out that neither Alaska or Virgin America offer the roomy, lie-flat seats that are popular on Delta, United and American airlines.

“My guess is they will have to add lie-flat seats on transcontinental flights if their intention is to be competitive in those markets,” he said, another consumer benefit.

In the meantime, Alaska must figure out how to win over some of the most hard-core Virgin America fans.

"I would be disappointed if Alaska modified the fabulous in-flight entertainment system that always featured newly released movies and access to live TV, the very tasty meals or the seat-to-seat chat system," said Eric Rose, a partner in a Los Angeles media and public relations company who flies Virgin America for vacation travel.

An Oklahoma fan of Virgin America wrote a Twitter message after the deal was announced, saying, “Let's hope airfare stays cheap and the in-flight experience doesn't change for the worst.”

(Hugo Martin - Los Angeles Times)

Alaska Airlines Adds New Routes To Connect California

Alaska Air Group, Inc. said Alaska Airlines would add new, three-times daily service between San Diego and Sacramento and Burbank and San Jose, commencing from March 16 next year. According to the company, the nonstop service would connect California fliers to London, Beijing and Tokyo on its partners British Airways, Hainan Airlines and Japan Airlines.

Alaska Airlines' Chief Commercial Officer, Andrew Harrison, commented, "These new routes will bring more options and low fares to our California customers, as well as creating new connections to key international business markets served by our partner carriers."

The airline firm said it would fly the routes with 76-seat E175 jets, operated by SkyWest Airlines that features 12 seats in first class, 12 seats in premium class and 52 seats in the main cabin. The company added that the E175 boasts cabin dimensions on par with a mainline jet. Its onboard amenities included Wi-Fi Internet access, and Alaska Beyond Entertainment that included free and premium entertainment direct to customer devices and power outlets in the first class cabin.

As far as its mileage plan, Alaska said mileage plan members could earn, as well as, redeem miles on 17 airline partners, who fly to over 800 destinations around the world. The airline firm said that members also earned miles based on distance flown when traveling on Alaska, irrespective of fare paid.

(R. Chandrasekaran,- Benzinga / Yahoo Business)

Southwest Airlines pilots descend on the carrier's annual meeting in Chicago

Southwest Airlines CEO Gary Kelly was full of nothing but cheery news — including a boost in the company stock dividend and new routes — as he stood before shareholders this morning at the carrier's 2016 annual meeting at the Renaissance Blackstone Hotel in Chicago.

But outside the hotel it was quite a different story.

More than 500 Southwest Airlines pilots, disappointed by the glacial progress in getting a new contract with the airline, were walking a massive picket line holding signs such as "Contract 2012: Four Years Delayed," that captured the group's none-too-upbeat mood. Several hundred more pilots were expected to walk a second picket line this afternoon near Chicago's Midway Airport, where Southwest has it largest hub.

The pilots were joined on the picket line today by representatives from both the flight attendants and mechanics unions at Southwest. Both groups also have been trying for years to get new deals with the low-fare behemoth, also with no success. The show of solidarity among three key labor groups at Southwest is the largest such demonstration ever in the company's 45-year history.

Southwest Captain Jon Weaks, president of the powerful Southwest Airlines Pilots' Association, said his members are tired of waiting to get a deal. "We want to be rewarded for our productivity," said Weaks, who believes new contracts and wage scales should reflect the work his pilots do.

Weaks also indicated some of his membership are now leaving Southwest because they are frustrated by the slow pace of negotiations and are going to other carriers where they can get better deals. At a press conference Kelly later disputed the claim that significantly more pilots are leaving as contract talks with pilots have dragged on for four years.

Weaks also suggested the union has seen some slight positive movement in the contract talks the past couple of weeks, but remains skeptical a breakthrough could be imminent. CEO Kelly is expected to meet with the pilots' negotiating team on June 7, the first time he has personally sat at the bargaining table during the talks. In an interview earlier this week, Kelly signaled any new contract could hinge on what kind of productivity concessions pilots were willing to make.

Meanwhile, at today's annual meeting Kelly called 2015 a "very gratifying" year for Southwest, citing record traffic, record revenue, record profits and a record stock dividend, among other accomplishments. Kelly said the company is increasing its quarterly dividend by 33 percent. On a cumulative basis, Southwest has grown its quarterly dividend twenty-fold over the past five years, the company said. The Southwest board of directors also authorized a $2 billion share repurchase plan.

Kelly's route system growth plans for the near term remain relatively modest. Long Beach, California, will come on line next month, and the carrier plans to add service from Los Angeles International Airport to several destinations in Mexico in the near future. And Kelly said once Southwest gets final approval from the federal government, it is prepared to launch service to Cuba by the end of 2016.

But Kelly steered clear in his prepared remarks of any comments on the prolonged contract negotiations with pilots, flight attendants and mechanics. But he repeatedly said how much he respects the company's employees, even as huge numbers of pilots were walking a picket line just a stone's throw from where Southwest CEO stood.

(Lewis Lazare - Chicago Business Journal)

Thursday, May 12, 2016

‘From Russia to Love’: Southwest, other U.S. airlines adding hand-me-down jets

Here we see the Southwest Airlines yard at Boeing / Paine Field February 28, 2015. You can clearly see three used -700s (L to R - Westjet, Oman Air and in the back Aeromexico) waiting to be converted to the Southwest brand.
(Photo by Joe G. Walker) 

It’s a tale that could be dubbed “From Russia to Love.”

Two Boeing Co. 737 jetliners swooped onto a factory airfield near Seattle in March, the last of the models once flown by a collapsed Russian carrier. They were headed for makeovers to erase the Cyrillic logos and any other trace of Transaero Airlines. Next stop: Dallas’ Love Field, where hometown carrier Southwest Airlines Co. is on a record shopping spree.

The imports are integral to what Jon Stephens, Southwest’s director of fleet transactions, describes as a “beautiful plan” to swap out some of its oldest models without spending lavishly. The carrier’s in the middle of acquiring 83 used Boeing 737-700s from around the world, the largest such haul in its more than four-decade history.

Southwest and its U.S. competitors — now awash in cash after earning record profits last year — are scouring developing nations for secondhand jetliners, as cheap fuel makes older, less efficient aircraft more economical to operate. That bucks the traditional flow of hand-me-down planes from North American carriers to counterparts in emerging-market countries and makes an already volatile market for Boeing and Airbus Group SE more unpredictable.

“If you’ve got excess things with wings, you are probably trying to sell it in the U.S. right now,” said George Ferguson, senior air transport analyst at Bloomberg Intelligence.

Driving the shift is the collapse of crude prices. While the commodities downturn has clipped economies from Russia to Brazil, lower fuel costs helped U.S. airlines earn almost $19 billion last year.

China, Brazil

United Continental Holdings Inc. is importing as many as two dozen used Airbus A319s from China. Delta Air Lines Inc., which pioneered the strategy, is studying taking used 737s as its Brazilian alliance partner, Gol Linhas Aereas Inteligentes SA, shrinks and restructures operations.

The carriers haven’t cut back on new aircraft orders, either, in a buyer’s market for cutting-edge jets. Because the used planes don’t need to be flown heavily to recoup capital costs, they can be added selectively to routes “so airlines have more schedule flexibility and can improve on-time performance,” said George Dimitroff, head of valuations for Ascend Flightglobal Consultancy.

Older planes have lost their stigma in the U.S. during the last 15 years as four of the largest airlines filed for bankruptcy. To cut costs, they deferred orders and made do with planes they previously would have swapped for newer models. They’ve expanded the practice even as fortunes have reversed this decade, taking advantage of sophisticated maintenance operations to extend service.

Fuel bills

Used-jet imports to North America jumped 29 percent to 198 airplanes last year, with Southwest leading the way, followed by Allegiant Travel Co. and Delta, according to Ascend data.

Lower fuel bills mean airlines are hanging onto older single-aisle jets rather than parking or scrapping them. Of the smallest Airbus and Boeing models, only one A319 and no 737-700s have been disassembled for parts this year, compared with a total of 17 in 2015, according to Ascend.

“It’s partly a function of oil and lease expense, and there’s actually demand by airlines like United and Southwest that want to acquire these airplanes and fly them,” Dimitroff said. “They’re more valuable as fliers than a collection of parts.”

Aircraft market

The trend is adding to a topsy-turvy global aviation market for the leading manufacturers, Boeing and Airbus. They already face slowing sales as airlines navigate currency fluctuations and sub-$50-a-barrel oil, which has reduced the incentive to buy more fuel-efficient aircraft.

With fewer single-aisle jets retired to aviation boneyards, there’s a risk of a glutted market as Boeing and Airbus boost monthly output of single-aisle jetliners to about 60 apiece by the end of the decade from the present pace of 42. Lessors haven’t yet found airline customers for more than 900 narrow-body aircraft on order over the next five years, according to a March 29 report by Goldman Sachs Group Inc.

“I look at two guys producing narrow-bodies at 60 per month and I’m thinking this is just not going to work out well,” said aviation consultant Robert Mann.

For now, Boeing hasn’t seen demand slip for its workhorse 737 jetliners. In fact, more orders are expected since about 700 narrow-bodies are already past the 25-year mark, when planes typically are parked. That should prompt a wave of retirements.

“Airlines that are buying used aircraft are also buying our new airplanes,” said Randy Tinseth, Boeing’s vice president for marketing. “We are not seeing any new trends that would change future demand.”

Still hunting

But the trading in used jets can skew the forces of supply and demand. Prices for decade-old Boeing 737-700 jetliners actually rose last year as Southwest dominated the market. The planemaker has delivered 1,116 of the -700, the smallest jet in its current lineup, and Southwest will fly nearly half of them by the time its spree winds down in 2018.

Southwest is on the prowl for more used aircraft even though it has ordered 200 of the 737 Max, upgraded planes due to make their commercial debut next year. The Dallas-based carrier also struck a deal with Boeing for 33 new 737-800s late last year.

“If the economics don’t work, we’ll go new,” Stephens, the Southwest fleet executive, said of the airline’s jet strategy. “That’s the trump card we hold. The leasing community knows that and knows what the Southwest deal is.”

The airline bought used planes as far back as the 1970s, the decade in which it began flights. But the low-cost carrier never thought seriously about making older planes a competitive weapon until about three years ago. Stephens’ team saw a glut of deeply discounted Boeing 737-700s as the perfect replacement for smaller Boeing 717s that Southwest planned to offload to Delta.

Replacing classics

Prices and lease terms were so attractive that Southwest also decided to use the secondhand planes to help replace 737 Classics — older, crack-prone jets whose upkeep costs were soaring. A dispute with its pilots union was also a factor as the carrier accelerated its retirement date for the planes by four years to 2017.

The carrier turned to AerCap Holdings NV, the largest independent lessor, to help find planes coming onto the market. As Transaero, then Russia’s second-largest airline, spiraled into crisis late last year, AerCap flew the planes to Ireland and eventually to the U.S. After makeovers, they will look like every other Southwest jet.

“There are a lot of reasons why it makes sense,” Stephens said. “It’s been a beautiful plan to replace the 717s, and bridging to the Max is huge. It positions us very, very well.”

(The Dallas Moring News / Bloomberg Business News)

Boeing has just 12 of its 'Terrible Teen' 787 Dreamliners left to deliver

Top Boeing executives had to confer for a moment Wednesday to remember how many of the oldest 787 Dreamliners are yet to be delivered.

Speaking at Boeing’s annual investor conference, they finally agreed there are a dozen left.

“There are about 12 in inventory,” said Boeing Commercial Airplanes CEO Ray Conner. “We will deliver a handful over this year, and another over the course of next year."

The jets Conner cited, often called the “Terrible Teens,” were the very first versions of the 787 Dreamliner that Boeing built. They required significant retrofits to be made flight worthy, which have made them overweight compared to the Dreamliners Boeing is now assembling. As a result, it has been difficult to find buyers for them.

Now, though, it appears Boeing has been able to sell most of them. Just two of the early aircraft still need buyers, Nos. 4 and 5, Conner said. The remaining 10 have been sold but not yet delivered.

Boeing likely will sell the two remaining jets to individual buyers as personal jets because they’ll be different enough from lighter jets now being built that they won’t be serviceable in most airlines’ fleets.

Boeing donated the earliest three Dreamliners to three museums around the world, the first to the Seattle Museum of Flight.

While Boeing 787-8 Dreamliners list for $225 million each, the 12 will sell for far less.

Boeing so far has delivered 403 Dreamliners and has unfilled orders for another 751.

Boeing has now raised Dreamliner monthly production to 12 between its Everett and North Charleston, South Carolina plants, which is a record for any wide-body jet. The company plans to lift production to 14 planes per month.

(Steve Wilhelm - Puget Sound Business Journal)

Wednesday, May 11, 2016

Southwest Airlines gets some really good news on reward seat availability front

Southwest Airlines' on-time arrival numbers may have lagged major competitors in April. But when it comes to award seat availability — one metric important to many frequent travelers — Southwest really soars.

In Switchfly's annual Reward Seat Availability Survey of 25 airlines around the world revealed today, Southwest and Air Berlin tied for the No. 1 spot in the survey, with both carriers showing 100 percent availability. Both Southwest, which has its largest hub at Chicago's Midway Airport, and Air Berlin managed to hold on to their top rankings year over year.

It was a different story, however, for two other major carriers in the Chicago market, United Airlines and American Airlines. Chicago-based United, which has its largest hub at Chicago's O'Hare International Airport, saw its percentage of available reward seats fall 2.9 percentage points to 72.1 percent, putting it in 15th place in the rankings. United is a unit of United Continental Holdings. The results for American Airlines, which has its third-largest hub at O'Hare, were even worse. AA fell 10.7 percentage points in the 2016 survey to 56.4 percent, putting American in 21st place in the rankings.

The Switchfly Reward Seat survey is based on 7,140 booking and fare queries made by IdeaWorksCompany, an airline and travel brand consultancy, at the websites of the 25 airline frequent flier programs ranked in the 2016 survey. Travel dates for requested reward seats spanned June through October of 2016, with top routes for each carrier checked to assess "saver-style" reward seat availability.

The 2016 Switchfly survey did yield one especially surprising result — overall reward seat availability is up for the third year in a row. This comes despite many frequent fliers talking about how much tougher it has become to get reward seats at many airlines.

Of the 2016 queries made for the new Switchfly survey, 76.6 percent yielded reward seats, up from last year's 74 percent and the 2014 result of 72.4 percent. Long-haul availability has improved significantly as well, with eight airlines having availability scores above 70 percent for 2016, compared to just three in 2010.

The 2016 Switchfly survey also showed that July is the worst month of the year for reward seat availability, with only 53.1 percent of reward seat queries for that month resulting in outbound and return award seats. The availability percentages climbed significantly in the fall, however, with 84.3 percent of September queries and 84.8 percent of October queries resulting in outbound and return reward seats.

Commenting on the seventh annual Switchfly Reward Seat Survey, the company's CEO Daniel Farrar said: "This survey reflects the fact that airlines can't afford to take their customers for granted. 21st century consumers are savvy and plugged-in. They know when their loyalty programs are offering them a real value and when they are not delivering. They don't have time for loyalty programs that aren't delivering, especially in such a competitive space."

(Lewis Lazere - Chicago Business Journal)

Surplus Singapore Air A380s Set for Paint Shop to Lure New Users

Aircraft-leasing firm Doric is preparing to take back five Airbus Group SE A380 superjumbos from Singapore Airlines Ltd. starting next year, in a move that would be the first test of second-hand demand for the world’s biggest jetliner.

While Singapore Air hasn’t officially decided to return the planes, London-based Doric and fellow owner Dr. Peters Fund KG of Germany are preparing for their possible refurbishment, reserving time in paint shops and exploring the availability of hundreds of replacement seats.

“It appears possible that Singapore will not exercise its lease extension,” Doric Managing Director Bernd Reber said in an interview. The asset manager is also working with Airbus to highlight the possible availability of the double-deckers to potential users.

Singapore Air was the initial A380 buyer and operates 19 of the jets, second only to Dubai-based Emirates, on routes including London, New York and Beijing. The first 10-year leases expire in 2017, though until now Doric and Dr. Peters had said the carrier would likely exercise an option to keep the five aircraft for two further years, even though it has five more new planes due.

Attractive Rates

Reber said tier-one airlines are among parties interested in the Singapore jets. British Airways parent IAG SA has said its evaluating the possibility of taking used A380s to supplement the 12 planes it has already ordered for BA, and that aircraft could even be allocated to its Iberia and Aer Lingus units.

There’s no established second-hand trade in the aircraft yet because the first example was handed over only in 2007, while the market will also lack liquidity, with only 180 planes in service with a dozen operators.

Leasing superjumbos would save on the $432.6 million list price, while rates would be “attractive” and rental periods could be shorter than the usual 10 to 12 years, Reber said.

Reconfiguring cabins would also be more straightforward for earlier A380s as first class seating is located on the main deck -- rather than the upper level as on later examples -- and could easily be replaced with economy berths.

Airbus has suggested that A380s retired by premium carriers might have a second life plying six-to-eight-hour routes for low-cost Asian airlines. The manufacturer is also seeking fresh sales avenues for new examples of its biggest model after order momentum slowed in recent years, something that could complicate the marketing of used aircraft.

Singapore Air said in an e-mailed statement that it has yet to make a firm decision on whether to extend the leases on its first five planes.

(Andrea Rothman & Richard Weiss - Bloomberg Business News)

Thursday, May 5, 2016

FAA certification of advanced Leap-1B engine a boost for Boeing's 737 Max jet

Tight ground clearance dictated the slightly flattened bottom of the LEAP 1-B engine for the 737 Max. (Boeing)

The advanced Leap 1-B jet engine powering Boeing’s 737 Max has been certified by U.S. and European authorities, a major milestone for Boeing’s best-selling jet.

Engine builder CFM International announced the Federal Aviation Administration approval Wednesday, pointing to engine results in early operations.“We couldn’t be happier with the way this engine is performing,” said Francois Bastin, executive vice president of CFM International in a statement. “Boeing is racking up an impressive number of flight hours with the test aircraft, and initial indications are that engine performance is meeting expectations.”

The certification is another thumbs up for the Renton-based 737 Max program, which has been hitting milestones and has been virtually glitch free.

“ Max looks like a very well-run program on the air frame side and engine side, and reinforced the possibility that maybe they’ll even be early,” said Teal Group analyst Richard Aboulafia. “They’ve been doing great. Their story is they learned a lot for the 787, and that might well be true.”

However, analysts point out that the more-efficient engine may still exhibit flaws in actual service, just as the competing Pratt and Whitney geared turbofan engine passed certification but turned out to have difficulties in hot climates.

Airlines have been upset enough with the unexpected GTF problems that Qatar Airways wouldn't accept the first A320neos at all until the issue is fixed, and Lufthansa was using the jets only in limited applications.

“There could still be some problems that only surface after the engines are in regular airline use,” said Hans Weber, president of Tecop International Inc. in San Diego.

Both engine makers have been driving for higher fuel efficiency, with the LEAP 1-B burning 15 percent less fuel than the CFM International engine Boeing uses for current 737 Next Generation models.The Boeing 737 Max uses only the Leap-1B engine, while the competing Airbus A320neo offers another version of the Leap engine, or the troubled Pratt and Whitney geared turbo fan engine.

Engineers used a variety of technologies to squeeze more efficiency from the Leap 1-B, including special ceramic matrix composites that can withstand higher heat inside the engine, and updated fans and fuel combusters. But the core design of the engine has remained a relatively straightforward turbofan engine, unlike the geared turbo fan, which uses a system of gears to slow the fan for more efficiency.

“We’ve never seen such a divergence in propulsion, we just haven’t. Two people taking extremely different roads to what they think is the same place,” Aboulaifa said. “That’s going to be very interesting to watch. It’s almost too different to believe.”

(Steve Wilhelm - Puget Sound Business Journal)