Counterpoint’s February in Aviation

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7 March 2019 - 17:22, by , in Uncategorised, Comments off

Most welcome news for the aircraft enthusiast in February is Swiss’ commitment to its remaining five A340-300 aircraft. It is an aircraft that has seen diminishing numbers emphasised by continued operator fleet retirements from the likes of Air France, Cathay Pacific Airways, China Airlines, LAN, Virgin Atlantic; but to name a few. Limited secondary market placement opportunities have led to increased storage and eventual disassembly. Whilst disassembly has been worthwhile because of aircraft commonality to A330 aircraft, and at the engine level, the CFM56-5C’s commonality to CFM56-5B, and to a lesser extend CFM56-7B variants, it is often an unknown that those CFM56-5C engines powering the A340-300, in the right operating climate, have been rather reliable. In fact, Counterpoint understands some of its CFM56-5C4 engines have achieved over 40,000 hours on first-run maintenance intervals.  This is most definitely true of Swiss’ engines. Cabin refits of its A340s and operations out to 2025 mean a continued well-paired operation where others are exiting or have exited.

Elsewhere in February, Boeing announced a partnership with Supersonic aircraft company Aerion. Citing significant investment in coming years, it promotes hope that a return of supersonic passenger travel is possibly upon us. In-directly, as it concerns the former McDonnell Douglas marketed MD-95, the Boeing 717, QANTAS have seemingly caused local uproar with a decision to have its fleet of 717s maintained by ST Aerospace of Singapore. The contract includes heavy maintenance whist a dedicated Canberra Hanger, that opened in 2015, will be responsible for regular maintenance. With the move set to impact the workforce at currently contracted Korr Aviation, the decision to ferry an aircraft used for domestic services to Singapore on the surface, seems costlier.

Counterpoint’s Supply Chain 

Insourcing or not sourcing? Coverage for aircraft OEMs and engine OEMs most up-to-date products often details how they have a range of suppliers for isolated systems and components. Counterpoint often witness this at times of component issues as OEMs efficiently shift supply to eradicate costly delays and ensure minimal AOG events. To keep suppliers incentivised, OEMs built on a tradition of investment, collaboration or joint venture ownership with many of these suppliers, meaning that there is an intrinsic involvement during the life of the aircraft. The squeeze from OEMs to supplier to produce at lower costs has caused rumblings. At Boeing, perhaps off the back of the issues of initial supply on 787 Family setting a precedent, its squeeze on suppliers has continued to diminish initial supplier margins. With Boeing looking to increase its presence in the aftermarket with Boeing Global Services product, where many suppliers with an MRO centre operate, Counterpoint is seeing acquisitions externally to the big OEMs as suppliers leverage against this and would expect further opportunities for acquisitions of competitors or innovators. On-going aircraft developments at Boeing, notably the New Middle of-the-Market Airplane (NMA) 797 or 7K7, have been a closed discussion for suppliers to date with Boeing taking the lead on this internally. A decision on the aircraft coming to market is still due, as Boeing wrestles with its business case. Reports suggest this will occur in 2020 after a pre-marketing campaign.

Linked to the above, Bombardier recently strengthened its position on its latest Global 7500 aircraft program with the acquisition of Triumph Group’s wing manufacturing and asset holdings and is aimed at securing Bombardier’s production ramp-up and long-term success to support the estimated orders of over 100 and production rate ramp-up from 15 to 20 in 2019, to 35 to 40 in 2021. Previous issues of delays to the Global 7000 program were not cited in the acquisition, and instead, Triumph is building a strategy centred around integrated systems and aftermarket offerings.

Counterpoint’s Aircraft in Focus

Bombardier’s CRJ series of jets with aft-mounted engines now have an additional offering in the market, the CRJ550. For several years, and whilst competitors have produced re-engined or clean sheet designs, Bombardier have resiliently stuck by the CRJ, and have assured the market that it would further develop the model; and here it is. Despite some success of late with orders from the likes of American Airlines and Delta Air Lines for the CRJ900, there has been reduced production rates for CRJ700/900/1000 aircraft, and a diminishing backlog. Counterpoint do not expect the CRJ550 to overhaul the competition given that it does not represent a leap in technological enhancement, however, what it achieves for United Airlines, is answers to its requirement for a premium North American operated aircraft as the premium economy seating boom continues. Further, and unlike some of the new-to-market regional aircraft, there is no issue with North American scope clauses relating to the number of seats and Maximum Take-Off Weight. Coupled with ageing, high hour and high cycle CRJ200 and ERJ145 aircraft, the idea of reconfiguring technology that already exists, appears to be a good short-to-medium-term measure and offering, and in addition, being a 50-seat aircraft means that United can contract the aircraft out to a regional airline. GoJet will commence operations in the second-half of 2019.

Counterpoint’s OEM Watch

Rolls-Royce is out of the running to provide a powerplant offering for Boeing’s ‘still to be decided’ NMA aircraft. Citing priorities and fix commitments to the Trent 1000 engine program, Rolls-Royce will leave both CFM and Pratt-Whitney to battle it out. A shame for 757 links and the gutsy sounding RB211-535.

A potential upside though is an announcement that Rolls-Royce is to offer a JV Chinese manufacturing plant for its first twin-aisle/widebody aircraft; the COMAC C929. It is thought that a similar offering to the Trent 7000 (and therefore Trent 1000) is being marketed. Not only could this propel the first Chinese twin-aisle, but any such facility could act as an aftermarket or original production solution for what is the largest A330 market, aboard which Rolls-Royce has the dominant engine type or sole-source engine type on the A330-200/-300 and A330-800/-900 variants respectively. With China’s expected demand for aircraft, Counterpoint feel that this is sensible positioning that not only supports a China-made aircraft, but also Airbus and Rolls-Royce.

Counterpoint In-house

February has been a busy month as the Counterpoint team prepare for several events during March and early April. The month’s theme has been Aerostructures, as we prepare the annual release. Director and Co-founder Richard Apps is giving our aviation market peers some insight into these hot-topics at the on-going SpeedNews conference this week.

February’s Good News

Counterpoint must applaud British Airways and its retro-livery of the 1964-1974 British Overseas Airways Corporation (BOAC) on 1999 build 747-400 registration G-BYGC. A must see. Now we all await a Landor livery, another addition to the four-strong retro liveries being released from the paint shop.

Upcoming Events

Please see our website for contact information if you wish to arrange a meeting.

Event Date Counterpoint Attendee(s)
ISTAT Americas (Florida) 9th – 11th March, 2019 Kane Ray
JEC World 2019 (Paris) 12th – 14th March, 2019 Richard Apps
Aircraft Interiors Expo (Hamburg) 1st – 3rd April, 2019 Richard Apps, Ben Bettell, Kane Ray


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