Original Equipment Manufacturers: March 2008 Archives

I recently highlighted two aviation conferences as part of my Paddy’s Day blog about the latest parade of industry greening efforts - the Green Skies Conference and Exhibition in Orlando, Florida, and the Eco-Aviation Conference in Washington DC. The events were scheduled to occur one month apart, starting with Green Skies on 21-23 May. Fast-forward a week-and-a-half, and Green Skies has been shelved for now, while Eco-Aviation is still firmly planted.

I asked my friend, founder of the Green Skies consultancy Michael Miller to discuss the reasons why such an actively-promoted conference was no longer in the books. Did the choice of Orlando as a venue, for example, hurt the event? Regulators who will decide environmental law are, after all, in DC.

Such an assessment, he says, would be inaccurate. “We've postponed the event this year because of the down economy and the desire by many companies to trim their conference budgets,” says Miller. “Green Skies will resume next year when the timing may be better. We're 100% committed to this effort and helping aviation become greener.”

To that end, Green Skies launched a new program this week called "Hug an Airline, Hug an Airport" in conjunction with branding firm Aerobrand that analyzes how going green can boost your brand and win new business. “It's very exciting and we already have an airline exploring this,” says Miller.

Personally, I have a few ideas on which airlines need the biggest hug (someone's 40-year-old DC-9s come to mind). If you've got your own thoughts on this one, please feel free to add your comment below. But I digress. For folks who are still keen to participate in a green aviation conference this year, Eco-Aviation is readying for its 18-20 June event at the Capital Hilton.

Backers of the conference say regulators, manufacturers, airlines, and airports will be in attendance (Airbus and Boeing are confirmed speakers). “What more do you need to find out what’s happening in Eco-Aviation?” asks the conference brochure. Here is what you can expect from Eco-Aviation in its own words:

Several companies are starting to look well-positioned to benefit from what is, according to some analysts, a looming downturn in the industry. AAR appears to be one of those firms.

Headquartered in Wood Dale, Illinois, AAR operates four segments – aircraft sales and leasing; aviation supply chain; maintenance, repair and overhaul (MRO); and structures and systems. All four units achieved double-digit sales growth in the 2008 fiscal third quarter. During an earnings conference call last week executives said they sees opportunities going forward.

In the aircraft sales and leasing segment, as the US faces a liquidity and credit crunch, AAR is “aware that there are owners of aircraft who have liquidity concerns, problems I should say and we believe we’re in a good position to benefit from that”, says chairman and CEO David Storch.

Most of AAR’s activity has been in the Boeing 737 classic family, such as the prior acquisition of 18 737s from Malaysian Airlines. Storch says that while the firm has not yet moved into the next generation arena, it is “looking today at opportunities in that market”.

Could the JPMorgan conference stuff any more speakers into its line-up? Jam-packed doesn’t even accurately describe the event, which is running at the same time as the SpeedNews conference in Los Angeles. Boeing's Randy Tinseth was in attendance at the former and Jim Haas at the latter. But if you were listening for confirmation of another 787 delay, you didn't hear it from either of the two today.

Check out the article here. Key phrases include:

After enjoying a chicken lunch - and strong words from the man with endless industry input, International Lease Finance (ILFC) chief Steven Udvar-Hazy - Tinseth said he guesses that there must "be differing opinions about where we are on the program after lunch". Tinseth did not announce another 787 delay.

Boeing product marketing director Jim Haas also maintained Boeing’s current projection for initial deliveries. Speaking to Flight’s Stephen Trimble on the sidelines of the SpeedNews conference, Haas assured that 787 launch customer All Nippon Airways (ANA) will "definitely" receive first delivery in early 2009.

United Technologies, whose Hamilton Sundstrand unit is providing nine systems for the 787, has downplayed delay chatter. “It’s going to be a great program, whether it’s a week later or another month later, it’s not going to matter all that much,” said UTC VP of accounting and finance Greg Hayes.

Then there are those nagging reports...

United Technologies (UTC) remains confident the Boeing 787 “is going to fly soon” and believes that “the big drama is behind us”. So said the firm’s VP of accounting and finance Greg Hayes this morning at the JPMorgan Aviation and Transportation Conference in New York.

While Hayes could not comment on Boeing’s latest schedule (the airframer has committed to release the new schedule at the end of the month), UTC is “ready and we are supporting that aircraft”.

UTC subsidiary Hamilton Sundstrand has won contracts to provide nine major systems for the 787 twinjet.

“It’s going to be a great program, whether it’s a week later or another month later, it’s not going to matter all that much,” says Hayes.

Contractual payments from Boeing will be made “once that airplane gets delivered”, says Hayes.

One well-known legend about Saint Patrick pits the missionary against an obstinate old snake, which didn’t care to be banished from the Emerald Isle. Patrick outsmarted the wily serpent and convinced him to get into a box, which was then pitched into the ocean.

Today, ingenuity is synonymous with "thinking outside the box". A growing number of airlines and manufacturers are now looking to push the boundaries of modern-day boxes to usher in what could be a greener – cleaner – future (which could, of course, be profitable too).

On the eve of Saint Patrick’s Day, here is a trinity of noteworthy efforts in no particular order:

1) Electric wheel drive – A system being developed by aptly-named WheelTug will facilitate the ground manoeuvring of aircraft. Because engine taxiing is reduced, environmental benefits could include savings, through fuel cuts, in emissions such as CO2 and NOx. Delta Air Lines is providing assistance as launch customer.

2) Alternative fuels – Last month a Virgin Atlantic Boeing 747-400 carried out a London Heathrow-Amsterdam flight in part using biofuel. The aircraft flew with one of four GE CF6 engines using a mix of biofuel composed of babassu oil and coconut oil, a concoction that Richard Branson deemed good enough to drink. Environmentalists panned the test, calling it a publicity stunt. Nonetheless, other carriers are now following suit. Hard on the heels of the Virgin test, Continental Airlines says it will pursue a biofuels demo with Boeing and GE in the first half of 2009.

3) Green aviation conferences – Two timely events are in the offing: the Green Skies Conference and Exhibition on May 21-23 in Orlando, Florida, and the Eco-Aviation Conference on June 18-20 in Washington DC. Major industry players are expected to attend both.

Of course a number of other projects are also worth mentioning, including new engine technology (of which I’ve blogged extensively here). Now I’m off to prepare for some reckless Irish dancing, and to enjoy a drop of that Liffey water.

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Embraer is cooking with gas, as they say. The company today reported a 61% increase in fourth quarter net profit on a 77% rise in revenue. A number of factors contributed to these gains. Discussing its results in a conference call this morning, Embraer president and CEO Frederico Fleury Curado said dedicated efforts to address the E-Jet family's growing pains over the last 18 months have proven effective.

Now enjoying the product of its labor – with the E-Jets maturing and customers vocalizing their satisfaction – it’s no wonder that Embraer does not see an immediate need to counter the proposed 110/130-seat CSeries (now on sale) or an Airbus/Boeing narrowbody replacement (which isn’t supposed to come down the pike until the latter part of the next decade anyway).

"We still do not have a clear vision about what is the optimum configuration of the next narrowbody aircraft, anything from 80- to 180-seats," he says, noting that it is his understanding that neither Boeing nor Airbus has decided on "anything with that respect either".

As a leading force in the 70- to 120-seat market, he says, Embraer has to be "very sober about making the right move at the right time".

"We will not put ourselves in a pressure until we are convinced exactly which way to go."

Certainly, if the CSeries is launched, and the Mitsubishi MRJ is confirmed, it is "rational" to imagine that Embraer may have "some market share lost with those new airplanes", says Curado.

But he notes that "the level of activity that we have been seeing since last year has not decreased" and, in fact, it is "very intense activity".

Embraer is not idle in terms of development; it continues to develop the E-Jet family, focusing on ETOPS and other initiatives.

Stay tuned...

I’m back in Amish Country after an eventful trip to Orlando for the annual ISTAT conference. After two days of speeches, several interviews, and one far-too-brief evening of dancing to the ISTAT band, I’m ready to make my life as easy as possible – and ensure some catch-up time with my daughter – by simply dumping some of the contents of my notebook onto this blog, which has been sadly starved in recent days. I’m sure there is a better word to use than dump, but there ya go.

Okay, sticking with the journalistic rule of alphabetizing company names, let’s start with Airbus. Conveniently, chief operating officer, customers, John Leahy was the first manufacturer to take the stage. Two years ago, he was forced to listen to major customer ILFC crank about the A350 design at ISTAT. Apart from a call this year from AVITAS senior VP – and infotainment specialist – Adam Pilarski for Leahy to “retire and stick the next guy with all the headaches” of the consultant’s projected aircraft cancellations (which he says will be “sizeable” and serve to “burst” the current bubble), the Airbus salesman received a pretty good reception as folks are understandably concentrated on the 787 saga right now.

First Leahy addressed some of Pilarski’s comments, saying this may be a cycle but it may not be “as steep a canyon” as previous years. Is there any reason for Airbus to bring a new single aisle aircraft to market before the latter part of the next decade? People are "smoking something" if they say the maker of the A320 really needs to come up with a new narrowbody sooner than now being predicted, in the 2017-2020 timeframe, says Leahy. He admits that, yes, the industry currently has a duopoly in Airbus and Boeing, and it’s “a nice stable duopoly” that will probably be around for quite some time to come.

Leahy is also confident that Airbus' rival will get the 787 program back on track. Speaking to me on the sidelines of the conference, he said that, in developing its 787 Boeing may have fallen into some of the “same traps” as Airbus on the A380 program, with Boeing having a “more extended supply chain”. He says the reported delay basically “says something about how complicated it is to build an aircraft”. There are “Monday morning quarterbacks” that are not familiar with the complexities of this, he adds.

The A350 XWB design, for the record, “is frozen” in terms of the fact that Airbus has “legally binding contracts” with performance guarantees that must be met, says Leahy. It features a large composite panel concept.

"The majority of the A350 XWB fuselage structure is made from CFRP, including the panels, doublers, stringers and typical frames," says Airbus PR. "The panel concept means that additional weight savings are achieved since each of the panels can be optimized in terms of their thickness according to the loads they will bear. The keel beam, centre wing box, belly fairing are also in CFRP."

Airbus PR adds that the wings of the A350 XWB “use CFRP and will be the largest CFRP lift structure, with a total area of 440 square metres. The centre wing box, stringers and spars will be made from CFRP”.

Boeing, meanwhile, is concentrating on getting the 787 flying, bringing the 777F to market, and clearing the 747-8. By now, the airframer’s VP marketing Randy Tinseth’s comments about the 787 program – how it continues to expect power on “sometime in the early beginning of the second quarter”, first flight at the “end of the second quarter” and first delivery “in early 2009” – have made plenty of headlines. You might not agree with this assessment (lord knows enough folks at ISTAT were sceptical), but this is what he said – don’t blame the messenger. Tinseth will speak again on Tuesday at the JPMorgan conference, so stay tuned.

There isn't much to celebrate here at Mystic Dunes in Celebration, Florida - one of the overflow hotels for the ISTAT conference. Staying here is like being handed a big, hard buttery crab for dinner only to find the guts of the thing is really green-yellow and rather sickly. But I can't fault the conference. It's downright riveting, at least from my front-row perch.

A number of moments are blog-worthy, and I hope to dedicate time to thrashing it out this week. But for now, I think it's definitely worth noting that Airbus and GE have made clear that expectations for new-technology aircraft before the latter part of the next decade is bordering on downright unreasonable.

There is an incredible amount of industry pressure in terms of addressing fuel burn says GE Aviation president and CEO Scott Donnelly. To make this happen, he says, is going to require a "massive investment".

GE will spend billions (about $2 billion to be exact) to get the kind of efficiency needed for next generation narrowbodies. To meet expectations, proper technology won't be mature "until 2015 to 2018".

Open rotor engines might very well be the answer but it requires a heck of a lot more study. Airbus VP of strategic marketing Philippe Jarry said clearly and simply: "We don't know what engine architecture will power the next generation airlines. We need to test them ... Even if we go to radical engine architecture change, it would not change [the] aircraft shape.

This made me wonder - what does Jarry think about the EasyJet concept aircraft revealed last year (and should we expect something resembling that design?). Well probably not exactly, but EasyJet -based in the UK - has been understandably vocal. EasyJet has also said it's design is a starting point for innovation.

Speaking one-on-one with me after his speech, Jarry said: "We cannot install the big propellers under a wing, so [the engine architecture] will drive our configuration as well. So that is why we really want to be on top of it. We want to stimulate them [engine makers]. If I put an airplane in service 30 years after the A320, I should get 30% [improvement in efficiency]!"

But airlines cannot simply make demands for narrowbody replacement in the next few years. "Everybody has to play their role. It is an industry challenge. It will be an industry issue, an industry effort, and an industry result."

Speculation that Boeing will once again delay the 787 program reached fever pitch yesterday among Wall Street circles and industry talking-heads. Journalists, bloggers and journa-bloggers alike (anyone understand the difference anymore?) did their duty to firm up the story - calling Boeing, 787 customers and anybody who might be willing to go on-record for a smidgen of confirmation.

So it wasn’t the biggest surprise in the world (but certainly cold comfort) when this morning Goldman Sachs reported it does not expect the first 787 to be delivered before the third quarter of next year. If true, this would represent another delay of at least six months. After market close this evening, however, Boeing continues to maintain that “nothing has changed in terms of our statements on 787 since our January update”.

Here in North America, Air Canada, Continental Airlines and Northwest Airlines have not commented (to its credit, Northwest has been working hard on a response). And US lessors Aviation Capital and International Lease Finance (ILFC) remain quiet.

But this is not a statement about the reported 787 delay – you know to simply do a bit of heavy Googling for rewrites of the Goldman Sachs report and analysts commentary. Rather, it is to make the point that in 2008, a hot story has a tendency to grow long legs – even without on-record comment. The industry is now waiting anxiously to see if a pair of snug-fitting credibility will be wrapped around those gams.

All it takes is one outspoken customer - that's what Airbus found out in March 2006 when ILFC chief Steven Udvar-Hazy told former Everett Herald journalist - and early aerospace blogger - Bryan Corliss that the A350 design, at that point, wasn’t up to snuff. Present a few days later at the annual International Society of Transport Aircraft Trading (ISTAT) in Orlando, Florida, Hazy reiterated his comments, and told an awe-struck audience that the aircraft didn’t measure up to the 787.

You know the rest of the story. Within months Airbus was working on a redesign of the long-range narrowbody. ILFC in October 2007 revised its agreement with Airbus to replace its November 2005 order for 16 A350 aircraft with 20 A350 XWBs.

So, can we expect big revelations about the 787 next week at ISTAT? A who’s who of the aviation industry will be in attendance, including ILFC. This journalist, blogger, journa-blogger, is headed down to Florida tomorrow to begin the journey to Celebration, and praying the story doesn’t break on-record when she’s trying to relax, Huck Finn-like, on a boat floating down the St Johns River.

(River photo from Wikipedia at http://en.wikipedia.org/wiki/Image:St_Johns_River.jpg)

I'm knee-deep in writing about new engine technology while trying to work through some patience-stretching computer problems (my little workhorse appears to have picked up something nasty in Sin City last week...I barely let her out of my sight!). While sifting through my notes, however, I came across this gem from IATA technical and operations specialist Juergen Haacker, who says the key point for engine manufacturers now is: "What do you need, manufacturing-wise, to accelerate this type of R&D activity?"

The answer, says Haacker, is "very interesting". Manufacturers say there are a number of prerequisites that must be met, including a "predictability of the future political environment for new engines". Best of luck to them on that one.

Noise versus emissions is very important, especially when considering open rotor technology. "If the government, especially local green activists, also push on the noise element locally, then the open rotor concept may not have the same chances. That is where IATA could step in and work with them," he says.

(CFM International)